Lanitis Bros. profits nose-dive

641 views
1 min read

Lanitis Bros. (LB), the local Coke bottler and milk and juices manufacturer reported a highly disappointing set of results for 2004, with net profits nose-diving to CYP 463.832 from CYP 1.25 mln in 2003 as parallel imports of Coke hurt sales and cut into the company’s profit margins.

Total turnover was up a miserable 2.6% year-on-year to CYP 51.45 mln from CYP 50.13 mln, while gross profits were up 0.8% to CYP 16.1 mln from CYP 15.98 mln a year earlier. The increase in turnover was driven by the growth of dairy product sales, which came as a result of the increased quantities of raw milk received by the Company following the liberalisation of the milk supply sector.

Given the increased competition from parallel imports, the Company offered large trade discounts on Coca-Cola products, thus burdening profitability margins at all levels.

A massive increase in sales & distribution costs, up 5.1% to CYP 13.14 mln and administration costs, up 10.3% at CYP 1.86 mln played havoc with the overall margins, forcing operating profits to dive to CYP 1.1 mln in 2004 from CYP 1.8 mln a year ago.

Operating expenses as a percentage of sales increased from 28.3% in 2003 to 29.2% mainly due to LB’s advertising campaign during the Euro

2004 and the Athens 2004 Olympic Games and the increased energy prices.

After the deduction of finance costs, profits before investment losses plunged 56% to CYP 1.02 mln from CYP 1.82 mln before. The company booked CYP 409.000 in investment revaluation losses from CYP 300.000 a year ago.

Net profits plunged by 63% to CYP 463.832 from CYP 1.247.826 in 2003,

well below management guidance. EPS was reported at 0.19 cent against 0.50 cent in 2003.