Hide
Please enter a keyword

Lion H1 Trading Update

Lion today announced its trading update for the half year ended 30 June 2018 in conjunction with Kirin Holdings’ half year announcement.

Lion H1 Trading Update

Tuesday, 7 August 2018: Lion today announced its trading update for the half year ended 30 June 2018 in conjunction with Kirin Holdings’ half year announcement.

Lion’s net sales revenue decreased 1.6% to $1,912.5 million, impacted by challenging trading conditions in the mature Australian and New Zealand beer markets and declines in chilled and ambient fruit juice. However, sales in premium categories and brands remained strong, particularly in the growing craft and contemporary beer segments and milk-based beverages.

The impact of the introduction of the NSW Container Deposit Scheme and rising energy costs contributed to a 9.2% decrease in the first half in group operating earnings[1] to $241.8 million. However, Lion remains on track to deliver a full year increase in operating earnings driven by continued improvement in market share, growth in premium categories and cost management.

“On-going weakness in consumer spending, coupled with rising cost inputs, means that we face challenging conditions in both the beer and dairy markets.  However, we continue to make good progress in tapping into the growing high-value segments and adjusting our cost base to reflect market realities,” Lion’s CEO Stuart Irvine said.

 

Lion Beer Australia

Lion Beer Australia saw a recovery from market share challenges during the June quarter, as a consequence of continuing to focus on investing behind its portfolio of brands, particularly in the growing contemporary and craft beer segments.

Originally a Victoria-only brand, Furphy has quickly won fans around Australia following a national rollout in February, rapidly boosting Lion’s volume share of the premium beer segment[2].

Iron Jack Crisp Australian Lager also continued its positive momentum since launching in late 2017, with a 4.5% volume share increase in the contemporary segment[3] and the launch of a new full-strength variant in June also showing promising early signs.

Lion also invested behind the Hahn trademark with the introduction of new packaging and the ‘Now you’re talking’ marketing campaign leading to an increase in Hahn’s share of the highly competitive contemporary segment.[4]

 

Lion Dairy & Drinks

Lion Dairy & Drinks continued to invest behind core growth categories and brands while focusing on strong cost management across its manufacturing operations.

In the highly competitive milk market the business continued to position key brands and categories for growth. While white milk remains challenging, Lion out-performed the market and grew value share in the milk-based beverages category, primarily driven by new product innovation and a strong performance from key brands Dare and Big M, both of which posted double-digit value growth. [5]

In specialty cheese, positive momentum from the Christmas sales period carried through to Easter and Lion continued to innovate in yoghurt with a new ‘on-the-go’ “Crunch” range from Farmers Union off to a good start since launching in May.  Lion Dairy & Drinks International also had a very strong half driven by yoghurt performance in Singapore.

At the same time, the business progressed plans to optimise its distribution network during the first half of the year and continues to focus on refining ranges across all product categories so that they are better aligned to consumer demand.

 

Lion New Zealand

Lion New Zealand maintained its leading market position with strong performances across its beer, wine and non-alcoholic portfolios.  

Lion’s craft beer brands outperformed the market with Panhead and Emerson's posting 35% and 25% volume growth respectively, while Mac's continued to grow volume and cement its position as the biggest selling craft beer brand in the country. [6]

Wither Hills and The Ned grew 7% and 13% respectively, making them the fastest growing of the top 10 wine brands in NZ. [7]

Lion New Zealand’s premium non-alcoholic portfolio of brands, The Drinks Collective, also saw strong volume growth, boosted by the re-launch of a lower-sugar version of the 25-year-old Mac's soda range. [8]

In June, Lion opened a new microbrewery, The Fermentist, in Christchurch which focuses on ethical sourcing and sustainable brewing practices. The business was also named a finalist in the ‘wellbeing’ category of the NZ Workplace Health and Safety Awards 2018.

 

Lion Global Markets

Lion Global Markets continued to execute its craft beer export model centred around creating a physical presence and brand building in priority cities in four markets – China, South East Asia, Europe and the US – while building its broader global distribution network. The group opened its second owned overseas Little Creatures venue in Singapore, following the opening of a Hong Kong venue in 2016.  The Little Creatures brand, now available in 30 cities globally, was also launched in Japan.

 

New Categories

Across the group, Lion also continued to invest in adjacent growth categories, acquiring a minority stake in Remedy Kombucha. This follows similar investments in Good Buzz Kombucha in New Zealand and Schibello Coffee in Australia in 2017.

 

For further information, please contact:

Tegan Flanagan

External Relations Director

+61 419 949 767

tegan.flanagan@lionco.com

 

Annelise Tregoning

External Relations Manager

+61 415 178 442

annelise.tregoning@lionco.com

 

ABOUT LION

Lion is a leading beverage and food company with a portfolio that includes many of our region’s favourite brands. We employ more than 6,500 people across Australia and New Zealand predominantly and take great pride in our local manufacturing footprint, which spans 34 sites – including large breweries, craft breweries, wineries, dairy farms, milk, cheese, yoghurt and juice sites as well as venues.

Lion is a company focused on long-term, sustainable growth. We have a clear strategy to reinvigorate our beer markets and contribute to vibrant and responsible drinking cultures; transform our dairy and juice businesses and champion the nutritional credentials of our portfolio; and build our presence in high-value categories in targeted international markets. To achieve this we invest in our core strategic assets – our people, brands, production facilities and supply chain.

 

[1]Excluding one-time items

[2]IRI packaged beer data YTD June 2018

[3]IRI packaged beer data YTD June 2018

[4]IRI packaged beer data QTR to 1 July 2018

[5] Dare + 11% value growth and Big M +14.3% value growth. Source: IRI MarketEdge Grocery & Convenience, Total Milk Based Beverages, Dollar Share YTD to 15/07/18

[6] AC Nielsen - Supermarkets & Traditional combined – volume growth Jan to June 2018

[7]AC Nielsen - Supermarkets & Traditional combined - Jan to June 2018

[8] AC Nielsen - Supermarkets & Traditional combined – volume growth Q1 vs YAGO