DB pushes for growth of 10pc

By SIMON HENDERY liquor writer

A year after dangling the possibility of higher dividends in front of shareholders, DB Breweries says it now has no immediate plans to increase its payout ratio.

Instead, funds will be put towards a "strong growth strategy" aimed at increasing earnings before interest and tax by 10 per cent this year.

DB chairman Sir Colin Maiden told about 100 shareholders at the company's annual meeting in Auckland yesterday that the board had reviewed its dividend policy, and would continue to do so, but had decided for now it was prudent to leave it unchanged.

At last year's annual meeting outgoing chairman David Sadler said DB would review its dividend policy because, having completed an upgrade of its Auckland brewery, future capital expenditure needs were expected to be modest.

Sir Colin said yesterday there had been a long debate among the board over whether to increase the present policy of paying out about 67 per cent of net profit attributable to shareholders.

In the end the need for more investment, particularly in the distribution side of the business, had prevailed, he said.

"There were a variety of views around the table but that was the end consensus."

DB reported a 13 per cent increase in bottom-line profit to $25.4 million for the year to the end of last September.

Managing director Brian Blake told the meeting the company's performance last year was aided by 2.4 per cent overall growth in the beer market, which he said was a significant turnaround after years of falling beer sales.

Blake said sales volumes and sales margin for the first quarter of the present financial year were in line with budget and ahead of last year.

He said the company would remain focused on its 10 per cent growth target for earnings before interest and tax.

"We recognise this is ambitious in a mature market but we are well placed to achieve this figure through our strong brand equity, the pursuit of new distribution opportunities, an ongoing focus on effectiveness and efficiency and the constant upskilling of our people."

After the meeting he said the company's distribution growth plans involved investing more in "theme bars", particularly in the Auckland market where DB's on-premise sales had lagged behind competitor Lion Nathan's.

DB's share price has leapt from $5.60 on the day of its annual meeting last February to $8.25 yesterday.

* A resolution to increase the pool of fees paid to all DB's non-executive directors from a maximum total of $200,000 to $255,000 was passed without debate. The fees were last increased in 1995.