United Breweries Net Profit Soars 720% In Q4, Recommends 1000% Final Dividend; Shares Slump

United Breweries Limited (UBL) faced a downturn in share prices on the National Stock Exchange (NSE) today, with cuts exceeding 2%, as shares traded at Rs 1,963.70 per share as of 11:52 am. The decline came despite the company's reported robust fourth-quarter results.

The leading brewer reported a consolidated net profit of Rs 81.55 crore for the March quarter of the financial year 2023-24, marking an eightfold increase compared to the same period last year. Revenue for United Breweries surged by 17.3%, reaching Rs 4,788.68 crore, as detailed in a regulatory filing on May 7.

In an exchange filing, United Breweries announced the appointment of Mr Jorn Kersten as the Chief Financial Officer and Key Managerial Personnel, effective August 1, 2024. This move signals a strategic step towards further strengthening the company's leadership team.

Furthermore, the company's Earnings before interest, tax, depreciation, and amortization (EBITDA) for the quarter stood at Rs 142.9 crore, showcasing a healthy operational performance. Notably, EBITDA margins witnessed a significant improvement, rising by 370 basis points year-on-year to 6.7%.

Despite these impressive financial results and strategic developments, United Breweries faced a dip in its share prices. This downward trend contrasts with the company's strong performance, raising questions among investors about the factors influencing market sentiment.

In a bid to reward shareholders, the Board of Directors has recommended a final dividend of Rs 10 per equity share of the face value of Rs 1 each (1000%) for the financial year ending March 31, 2024. However, the dividend is subject to the approval of the shareholders at the ensuing Annual General Meeting (AGM). If approved, the dividend will be disbursed on or before August 30, 2024.

On Tuesday, May 7, the shares of United Breweries closed at Rs 2,001.75, marking a 1% increase ahead of the earnings announcement. The company's performance was reflected in various key metrics, indicating robust growth and strategic innovations amidst a dynamic market space.

In the fourth quarter, UBL experienced a significant surge in volume, up by 10.9%. This growth was predominantly driven by the South and East regions, highlighting the company's strong regional presence and market penetration. Notably, the premium segment witnessed expansion, soaring by 21%, propelled by the outstanding performances of flagship brands like Kingfisher Ultra and Kingfisher Ultra Max.

United Breweries introduced Queenfisher to commemorate International Women's Day and London Pilsner Strong Beer in Karnataka. These initiatives not only underscore the company's dedication to meeting diverse consumer preferences but also its ability to capitalize on special occasions and local market opportunities.

While the full-year gross profit margin saw a slight dip compared to the previous year, the fourth quarter showcased promising signs of improvement. This suggests that United Breweries is effectively implementing strategies to enhance operational efficiency and profitability, even amidst challenging market conditions.

The company's investments in these areas are aimed at reinforcing its market position and driving sustainable long-term growth. Notably, UBL's capital expenditure (Capex) for the year amounted to Rs 190 crore, primarily allocated towards bolstering the supply chain for future expansion and efficiency.

Looking ahead, United Breweries acknowledges the presence of inflationary pressures in the market but maintains an optimistic outlook regarding the industry's long-term growth prospects. Factors such as rising disposable income, favourable demographics, and the ongoing trend towards premiumization are expected to fuel demand for UBL's products.

Investors have reaped substantial rewards from their investment in United Breweries, with shares delivering impressive returns over the past year. The stock has surged by more than 40% in the last twelve months and has witnessed an uptrend of over 60% in the past three years.