DB Reports Strong Lift - Half Year Results

STRONG LIFT IN PERFORMANCE FROM DB

DB Breweries Limited today reported a strong lift in both net profit and earnings before interest and taxation (EBIT).

Earnings before interest and tax in the six months ended 31 March 2003 were up 10.1% at $23.4 million, compared with $21.3 million in the same period to March 2002.

The company reported after tax earnings of $16.8 million for the first half of its financial year (ending 31 March 2003), up 25.1% on the $13.4 million earned in the comparative period last year.

DB Breweries Managing Director Brian Blake said that the 10.1% increase in EBIT was particularly pleasing in a beer market that had shown slight growth.

"Net sales were up by 6.6% with the increase in sales reflecting higher demand for DB brands, particularly over the key summer trading period," he said today.

This reflected the success of high profile brand marketing campaigns within the premium and mainstream segments.

"Overall, this is an excellent result and underlines the investment the company continues to make in building strong brands, while improving operational effectiveness," said Mr Blake.

"Completion of the upgrading and consolidation of operations at the Waitemata brewery site has resulted in significant operating cost reductions within the period. This upgrade provides DB Breweries with improved production and distribution facilities, and a single site for its Auckland staff."

Mr Blake said that DB Breweries' reported tax expense for the six months to 31 March 2003 had been impacted favourably by the release of a $1.9m provision held for company income tax assessed in the early 1990s but disputed by the company. This matter was recently resolved in the company's favour.

DB Breweries Chairman Sir Colin Maiden said a fully imputed dividend of 13 cents per share and a supplementary dividend to non-resident shareholders of 2.29 cents per share will be paid on 4 June to shareholders on the register on 23 May.

Reporting on operations, Mr Blake said that despite a highly competitive market, Heineken, Monteith's and Tui had maintained double digit growth.

Of note was the strong growth of Tui following its launch last year beyond its traditional lower North Island market. The brand had also recorded an excellent growth performance in supermarket sales since the introduction of beers into the grocery channel.

Mr Blake said Tui's high profile advertising and sponsorship programme had helped lift the brand's popularity throughout the country.

"The brand has made a significant investment in New Zealand rugby, with continuation of its sponsorship of the Hurricanes, a new sponsorship relationship with the Blues and broadcast sponsorship of the Super 12 competition on Sky Television. Tui's prominent billboard and television campaign has spearheaded its advertising programme."

Heineken's performance again confirmed its position as undisputed leader of the premium segment.

"The momentum of Heineken has been accelerated in recent months by a range of marketing and sponsorship initiatives, including the New Zealand launch of the global dance music initiative Thirst, the annual Heineken Open tennis and the rollout of Heineken draught beer," said Mr Blake.

"And we're looking forward to reinforcing Heineken's leadership in coming months through the brand's sponsorship of this year's Rugby World Cup."

The success of the Monteith's family of beers had again assured its place as New Zealand's premium craft beer brand, with the continuing popularity of its seasonal beer range contributing to the brand's growth.

"Summer Ale once more sold well ahead of schedule, not only exceeding the previous year's sales as expected, but providing an extraordinary sales result. The brand's reputation for innovation was again realised with the autumn release -- Kristall Weizen Bier -- a German--style clear wheat beer," said Mr Blake.

Export Gold performed strongly over the summer period assisted by high profile promotions like 'Party Island'. The new television commercial for Export Gold will help reinforce its position as New Zealand's leading mainstream lager.

Meanwhile, DB Draught's strong reputation had been maintained both in the South Island and with loyal Draught drinkers throughout the country.

Early signs for sales of the Tiger brand, distributed by DB Breweries since 2002, have been encouraging.

Mr Blake said Liquorland was continuing on its path to becoming New Zealand's strongest specialist liquor retailer, progressing ahead of operational and financial forecasts.

ends

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