Farsons sees 5% rise in turnover to €99.8m in 2018

By end 2019, the majority of Farsons distribution trucks will have Euro 5 or 6 emission standards. (source: Farsons media)

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Simonds Farsons Cisk Plc saw its turnover increasing by 5% in 2018 over the previous year to reach an all-time high of €99.8m for the financial year ending 31 January 2019, according to a press statement sent to Business Malta. Farsons registered an improved performance in its turnover as well as operational profitability across all its business segments.

The group’s pre-tax profit, following the “spin-off” of Trident Estates Plc in the previous financial year, reached €15.1m — an increase of 10% from last year’s profit of €13.8m.

Earnings before interest, tax, depreciation and amortisation (EBITDA) amounted to €23.2m, an increase of 5% over last year.

The group’s net borrowings decreased by €6m, 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 €96.6m to €108.3m reflecting the profit generated, net of the dividends distributed during the year.

Board recommends €0.10 per share dividend

The board has recommended paying a final dividend of €3m — €0.10 per share — for approval at the Annual General Meeting scheduled for 24 June 2019.

Together with the net interim dividend of €1m — €0.0333 per share — paid in October 2018, this will result in total dividends of €4m being paid in respect of the year ended 31 January 2019, the press statement says.

This represents an increase of 11% or €400,000 over the dividends declared in the previous year.

Challenging year behind

Despite what the company tags as “aggressive competition” in the local market, Farsons registered growth in its locally produced products while also increasing its imported beer, spirits and wine portfolio in response to changing consumer preferences, according to the press release. Its food import business together with its franchised food business registered higher turnover resulting in improved contribution levels, despite ongoing challenges on distribution costs, the press statement adds.

“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,” said Norman Aquilina, CEO of the Farsons group.

“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 workforce, 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,” Mr Aquilina added.

Farsons expects the mandatory national Beverage Container Refund Scheme (BCRS) on all one-way beverage containers to come in force in a year. Farsons says it is fully aligned with the environmental objectives of the scheme, adding that it believes effective enforcement across the board is an essential prerequisite for achieving the set objectives.

“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,” said Louis A Farrugia, Chairman of Farsons group.

Further projects in pipeline

Malta’s well-known local Cisk lager has its 90th anniversary this year. Marking this milestone, Mr Farrugia said that Cisk is “not only a Maltese icon but has won respect and a following from an international audience”.

The CEO also mentioned the Old Brewhouse project launched in 2018, which will feature a microbrewery, a brewpub, a visitor attraction, depicting Farsons history and story, and a cafeteria/bistro, among others. Coordinated with Trident Estates’s Business Park Project, the two projects could open in the first quarter of 2021.

“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,” Mr Farrugia concluded.