Lanitis Bros. Public Co. Ltd. reported a strong rebound in sales and profit for the first nine months of the year ending September, with profits helped in part by a successful cost containment effort.
Total turnover was up 13% at CYP 45.64 mln, driven higher by exports to Europe as well as from the distribution and sale of the prepaid areeba mobile cards.
Revenues from the production and distribution of room temperatures products (i.e. CSD’s, Fruit drinks & Juices, Water, Beer etc) (“category A”) advanced by 6.5% to CYP 31.5 mln, (69.1% of total revenues vs. 73.3% in 9M04), according to a research note by Egnatia Financial Services. Revenues from the production and distribution of refrigerated products (milk and dairy foods) (“category B”) advanced by 9.0% YoY to CYP 11.7 mln in 9M05, (25.8% of total revenues vs. 26.7% in 9M04). The selling and distribution of the prepaid Areeba mobile cards (“category C”) contributed 5.1% of total revenues at CYP 2.35 mln.
Gross Profit decreased by 4.1% YoY to CYP 13.15 mln with the margin deteriorating from 34.0% to 28.8% in 9M05. Given the increased competition from parallel imports, LB offered large trade discounts on Coca-Cola products and lowered some of the prices of its CSD products, thus burdening profitability margins at all levels.
Specifically, the gross profit margin of “category A” products fell from 37.2% to 31.3% in 9M05. On the other hand, the gross profit margin of “category B” products improved by 160bps to 26.9% due to higher prices charged for milk products, whilst “category C” products’ margin stood at 5.8%.
Operating expenses were contained by 6.0% YoY to CYP 10.67 mln, due to lower selling and distribution expenses (-8.2% YoY) and despite rising fuel prices. Administration expenses, however, rose by 8.8% YoY. Operating expenses as a percentage of sales were contained from 28.1% in 9M04 to 23.4%.
EBITDA advanced by 4.7% YoY to CYP 5.19 mln with the EBITDA margin declining to 11.4% from 12.3% in 9M04. EBT was burdened by CYP 274k from the impairment in the fair value of investments and CYP 205k from the share of loss from Heineken Lanitis Cyprus Ltd. (LB participates with 35%). LB posted net finance income of CYP 11k vs. a net finance charge of CYP 39k in 9M04.
Net Profit was strong at CYP 1.77 mln, up by 13.1% YoY in line with Egnatia estimates. EPS was reported at 0.71 cent vs. 0.63 cent in 9M04.
