UBL plans Rs 350 cr capex in 2023 to meet expected volume growth

Beer maker United Breweries Ltd, controlled by Dutch multinational brewing company Heineken, plans to infuse around Rs 350 crore as capital expenditure in 2023 to meet the expected volume growth in the country, according to a top company official.

The company has “good capex plans” in place for its breweries to meet anticipated volume growth going into 2023, said its Chief Financial Officer Radovan Sikorsky in its latest earning conference call.

“We remain optimistic on the long-term growth of the industry,” he said adding the evolving consumer trends will drive premiumisation.

When asked about the Capex plan, the CFO replied: “For the coming January to December the capex spend we are looking at somewhere in the region of Rs 350 crore.”

Moreover, the leading beer maker expects inflationary pressure to continue and it would pursue price increases, in combination with cost measures to mitigate these cost impacts.

“Inflation pressure on the cost of goods sold will most likely continue in the foreseeable future and hence we will continue to pursue with further price increases to strengthen our earning, in combination with cost measures to mitigate these cost impacts,” he said.

However, he also said there seems to be some softening on some of these components, but going forward it is still too early to comment on that.

“… I still think that pressures on margins will remain and it is a little dependent on our ability to increase prices and also manage our cost to try and mitigate any of that,” Sikorsky added.

Over the outlook, Sikorsky said, “If we look at the trend going forward, we continue to be positive about the category penetration while at the same time driving shares in our premium portfolio and that is key for us.”

UBL see an “appetite for premium products” also in India and wants to be strong in that segment as the leader.

During the July-September quarter, UBL’s premium segment grew 48 per cent, ahead of the total portfolio growing at around 23 per cent, he said.

Kingfisher remains the “bread and butter” as an “extremely important brand” for UBL.

“When we look going forward we will continue doing strong activities around the Kingfisher brand… ,” Sikorsky added.

UBL has reported a 66.94 per cent growth in its consolidated net profit at Rs 134.12 crore in the second quarter that ended September 30, mainly on the back of volume growth. Its revenue from operations was up 11.49 per cent to Rs 3,673.51 crore during the quarter.