Farsons continues to brew up profits amid strong growth and continued investment

Farsons Group has continued its strong performance into 2016 with a 20% increase in profit from continuing operations, which stood at €5.5m for the six months to 31 July 2016.

The drinks company’s profit came as a result of group turnover close to €46m, an increase of 4% on the same period in 2015.

The strong interim results come after the Group reported a 40% increase in profit for the year ending 31 January 2016, with a reported group profit of €11.2m, up from €8m on January 2015, while pre-tax profit from continuing operations grew by 23% to reach €10.1m.

The profit came from a turnover of €85m for the year, a growth of 7% compared to the previous 12 months, with more than €46m of this coming from brewing, production and sale of branded beers and beverages.

A further €26m of turnover came from the importation, wholesale and retail of food and beverages, and the remaining €12m came from the operation of franchised food retailing establishments.

The drinks company was buoyed by strong growth in the Maltese economy as well as a 5.1% increase in private consumption over the 12 months to the end of January 2016 and continued growth in the tourism market to record-breaking levels.

Farsons continues to invest in the business, with a new €27m beer packaging facility commencing operations this year, with the official inauguration taking place on 7 September 2016.

The new 4,500 square metre structure consists of three levels housing three packaging lines and ancillary storage of packaging materials, and will allow the group to produce and package beer and soft drinks in exportable packages at more competitive prices.

Group chief executive Norman Aquilina said: “We envisage that the benefits from this €27m investment will start to be realised within the [2016/17] financial year. Throughout the past year we were fully focused to ensure that this beer packaging investment was implemented according to set plans. Here, recognition is due to all the project team, ably led by our Chief Operations Officer Ing. Ray Sciberras.

“Technological developments have also enabled us to change the caps used to close PET bottles. The caps are now lighter and smaller, and are less costly. The new smaller caps also require a smaller thread on the bottle leading to more efficient production. These changes necessitated an investment in line components, carried out in December 2015.”

The new plant, which can package 30,000 bottles an hour and 40,000 cans will set the company up well for expected growth in the craft beer sector, both internationally and in the domestic market, which will help offset the challenging soft drinks market as trends continue to make consumers more health conscious in their beverage choices.

“The interest in craft beers continues, spurring a host of market innovation and consumers are truly curious and want to know the stories behind the brand,” Aquilina said. “Successful brands tend to be authentic and ‘local’, with their own story to tell. Craft beers punch well above their weight in terms of volume and value and are therefore an attractive market development for both brand owners and the trade.

“This development is therefore welcome news in many markets, driving growth in otherwise stagnant conditions with many traditional mainstream brands in decline.”

And Aquilina added that the increasing demand for craft beers was also helping to revive other sectors of the beer business.

“As the craft beer revolution takes root in many markets, this movement is also aiding the revival of the more traditional ale segment, previously in decline for a number of years,” he said. “Blue Label, one of the first brands in the Farsons’ beer portfolio, is leading this revival on the local market and experiencing an increase in demand, appealing in particular to the more discerning beer consumers who seek out its smooth and distinctive taste and character.”

A further investment of €10m in the Group’s warehouse facilities will also increase capacity of both the logistics and warehousing operations as well as the administration offices, and is due for completion in the summer of 2017.

Aquilina said the group was also continuing to invest in the development of its people: “Across the group, various initiatives have been introduced to motivate employees and enhance their performance, including ongoing training and development programmes, which are both directed at improving skills.

“With broad ranging investments and game-changing initiatives, we have worked hard towards establishing a stronger performance management culture. We have organised engagement workshops where employees had the opportunity to discuss the Group’s vision and objectives; there are ongoing efforts to enhance and align processes to continue to drive our results-oriented approach through working smarter and optimising the use of technology wherever possible.”

The strong performance of the group meant that it was able to award a final dividend of €2.2m to its shareholders, resulting in a total dividend of €3.2m for the 12 months to 31 January 2016, up from €3m for the previous year.