Grolsch increases exports by 20 percent
It was a mixed year for Royal Grolsch, the number four brewer in the Netherlands. While in the U.S. sales to retailers grew 35 percent, volumes in the UK fell by more than 10 percent in a sharply declining market.
Still, the Chairman of the Executive Board, Ab Pasman, called 2007 an “exceptional year”, not least because of an increase in export volumes which were up by more than 20 percent over 2006. The joint venture with Coors in the United Kingdom experienced another difficult year, with volumes declining by more than 10 percent and a slightly reduced market share in the Premium Lager segment, a segment that is currently under severe pressure. Volumes in the other international markets grew by more than 20 percent, with strong growth achieved in Russia and Kazakhstan together with Efes. As a result, the profit contribution made by the international activities of Grolsch increased sharply.
The second half of 2007 was marked by the joint public announcement that SABMiller and Royal Grolsch had reached a conditional agreement for an intended recommended public offer of SABMiller for all Grolsch shares. On 6 February 2008 SABMiller declared the offer unconditional and on 21 February SABMiller said that it had purchased 99.46 percent of the issued and outstanding shares of Grolsch.
As a consequence, Grolsch will be delisted on the stock exchange as of 20 March 2008. Having been bought by SABMiller, Grolsch has refrained from issuing a results forecast for 2008.
In 2007 Royal Grolsch grew volumes by 2 percent and turnover by 5 percent to EUR 333 million (2007: EUR 318 million). This figure includes a negative exchange rate effect of EUR 1.8 million, which was mainly attributable to the weaker U.S. and Canadian dollars. Same with everybody else, Royal Grolsch saw its operating expenses increase by more than EUR 14 million. Therefore, earnings rose less than turnover. EBITDA for 2007 was EUR 58.8 million (2006: EUR 56.2 million). Excluding one-off items, EBITDA rose by 5 percent to EUR 60.2 million (2006: EUR 57.5 million). The one-off items were: consultancy costs in 2007 connected with the planned acquisition by SABMiller (EUR -1.4 million), as well as costs associated with the change of distribution partner in the United States in 2006 (EUR -3.4 million) and income in 2006 connected with the settlement of the sale of the old brewery in Enschede-Noord (EUR 2.1 million).
Net profit increased by 4 percent to EUR 20.0 million, and by 19 percent excluding the aforementioned one-off items. The cash flow from business operations in 2007 was EUR 26.0 million (2006: EUR 58.1 million), which includes the payment of a EUR 31.7 million fine to the European Commission in connection with illegal price fixing – a fine, which is currently being contested by Grolsch. While awaiting the court’s judgment in the matter, the fine imposed by the Commission has been treated as a contingent liability.
Royal Grolsch proposes that the net profit for 2007 should be added to the other reserves of the company. This deviation from the previously formulated dividend policy is connected with the acquisition of Royal Grolsch by SABMiller.
