Tuesday 21 May 2019

A steady year of growth for Farsons – despite ongoing challenges

Simonds Farsons Cisk plc has registered an improved performance in its turnover as well as operational profitability across all its business segments. Farsons maintained its growth trend with Group turnover increasing by 5% over the previous year to reach an all-time high of €99.8 million for the financial year ending 31st January 2019.
Farsons Group’s pre-tax profit, following the ‘spin off’ of Trident Estates plc in the previous financial year, reached €15.1 million – an increase of 10% from last year’s profit of €13.8 million.

Earnings before interest, tax, depreciation and amortisation (EBITDA) amounted to €23.2 million, an increase of 5% over last year. The Group’s net borrowings decreased by €6 million, resulting in a lower gearing ratio of 23.4% as compared to 28.8% in the previous year. Total equity of the Group increased from €96.6 million to €108.3 million reflecting the profit generated, net of the dividends distributed during the year.
In spite of growing aggressive competition within the local beverage market, the Company has registered growth in its locally produced products whilst also increasing its imported beer, spirits and wine portfolio in response to changing consumer preferences. The Group’s food importation business together with its franchised food business registered higher turnover resulting in improved contribution levels, despite on-going challenges on distribution costs.
Farsons group Chief Executive Officer Norman Aquilina said: “While such results are encouraging and serve to motivate us to pursue further our strategic path, we shall continue to face our fair share of challenges. These include an ever increasing aggressive competition across all business sectors, rapidly evolving consumer tastes and preferences, as well as environmental and health considerations and resultant legislative pressures.”

“Also, there are, of course, both moral and business imperatives to do more than just increase profits. Indeed, we are obliged to take a long-term view which considers the interest of a wide spectrum of stakeholders ranging from our consumers, our work force, our suppliers, our shareholders and the broader community as a whole. Over the last year Farsons continued to implement wide-ranging initiatives to embrace our social and environmental responsibilities in practice, as enshrined in our mission statement, and this through increasingly operating our business units in a healthier, cleaner and more sustainable manner,” explained Mr Aquilina.

The mandatory national Beverage Container Refund Scheme (BCRS) on all one way beverage containers, is expected to come into force within a year, Farsons is fully aligned with the environmental objectives of the Scheme. The Group believes that for the Scheme to achieve its set objectives, effective enforcement across the board is an absolutely essential pre-requisite.

Commenting on the Group’s performance, Farsons Group Chairman Louis A Farrugia said: “Innovation remains high on the Group’s agenda, as management continues to prioritise the development of products which proactively meet, and exceed, the ever evolving expectations of our consumers. Another growth pillar is internationalisation. Following significant investments made by the Group, further tapping a growing number of export markets remains a priority, although this presents new and ongoing challenges that nonetheless continue to be addressed.”

Regarding Cisk lager’s 90th anniversary being celebrated this year, Mr Farrugia said that Cisk is not only a Maltese icon but has won respect and a following from an international audience.
Mr Farrugia also referred to the Old Brewhouse project on which works started in 2018. The project will feature among others a microbrewery, a Brew Pub, a Visitor Attraction, depicting Farsons history and story, and a cafeteria/bistro. Co-ordinated with Trident Estates plc’s Business Park Project, the two projects are forecast to open in the first quarter of 2021.
Mr Farrugia stated: “Farsons’s significant investments over many years have notably contributed to the improved performance, and the Group is cautiously optimistic of its ability to continue to deliver growth in its turnover and profitability in a growing Maltese economy, However, continuous growth is also dependent on sustained favourable economic conditions leading to increased consumer demand, equitable market conditions, a level playing field for all operators in the sector together with the growth of the tourism industry which is showing signs of reaching a plateau for the coming year.”
For approval at the Annual General Meeting scheduled for 24 June 2019, the Board is recommending a final dividend of €3 million (€0.10 per share). Taken together with the net interim dividend of €1 million (€0.0333 per share) paid in October 2018, this will result in total dividends of €4 million being paid in respect of the year ended 31st January 2019. This represents an increase of €400,000 over the dividends declared in the previous year – an increase of 11%.

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