|EBITA margin (%)*
|Sales volumes (hls 000s)
|– Carbonated soft drinks (CSDs)
|– Other beverages
Progress was made throughout the year in improving our brand portfolios, market focus and the operating efficiency of the business.
Beer volumes rose by 7% in the second half (up from 4% in the first half), resulting in an increase of 5% for the year. Our beer brand segmentation and portfolio management was improved as we executed refocused advertising and new product and sales initiatives. Our leading brand franchises (Pilsener and Salva Vida) have been strengthened, alongside new premium offerings (Bahia and Miller Genuine Draft) and enhanced lower-mainstream brands (Regia Extra and Imperial) designed to compete more effectively with low-priced spirits. Resulting recent volume trends are particularly encouraging in El Salvador, whilst further trade marketing and sales effectiveness initiatives are now under way throughout the region.
CSD volumes fell by 1% in the second half (compared to a 6% fall in the first half), reflecting an improving trend towards stabilisation following the regional weakness and increased competitive intensity in El Salvador, both of which began in the latter half of 2002. Our market share has stabilised in El Salvador and increased slightly in Honduras where volumes grew modestly in the second half. Strengthened brand positioning and marketing execution for Coke and Sprite are well under way, supporting our sector leadership in focusing on attribute rather than price-based competition. Further brand portfolio enhancement utilising the Fanta and Tropical brands is also a focus for fiscal 2005.
Turnover grew by 3%, as virtually unchanged total beverage sales volumes were accompanied by both price increases (for beer in Honduras and CSDs throughout) and the favourable mix impact of beer’s greater contribution to sales. This favourable impact was partly offset by strong growth in bottled water sales in the second half that, while contributing attractive gross margins, have lower price points. CSD prices rose by between 5% and 8% near the beginning of the fiscal year, while Honduran beer pricing increased by some 10% in March 2004. These increases have been accompanied by the positive impact of both pricing standardisation within channels and channel mix improvement.
Pre-exceptional EBITA more than doubled in the second half and grew by 36% for the full year as a result of operating cost reductions, improved operating leverage (on rising beer sales), favourable product mix trends, positive pricing, and unit cost savings through procurement synergies. Following our wide-ranging business restructuring, which resulted in a headcount reduction of 1,600, we are now realising the synergies between countries and from combining beer and CSD categories. EBITA margin rose in the second half compared to the prior year, driving the full year margin to 14.2% against last year’s 10.8%.
back to top