Lion blames CDS, energy costs for 9pc June-half profit decline

Sue Mitchell
August 7, 2018
AFR
In an ominous sign for Coca-Cola Amatil, dairy and drinks company Lion Co has blamed the launch of the container deposit scheme in NSW last December and rising energy costs for a 9.2 per cent fall in June-half operating profit to $241.8 million.
Net sales slipped 1.6 per cent to $1.9 billion as stronger sales of craft beers such as Panhead, contemporary brews such as Furphy and double-digit growth in flavoured milk were offset by weaker sales of traditional beers and chilled and ambient  juice.
The latest results, released on Tuesday by Lion’s Japanese parent, Kirin, followed a 6.3 per cent fall in earnings to $609 million and an 8.2 per cent fall in sales to $4.04 billion in calendar 2017.
However, chief executive Stuart Irvine believes after years of declining profits Lion is on track to deliver an increase in earnings for the full year, underpinned by market share gains, growth in premium categories and cost savings.
“On-going weakness in consumer spending, coupled with rising cost inputs, means that we face challenging conditions in both the beer and dairy markets,” Mr Irvine said.
“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 is also investing in adjacent categories, acquiring a minority stake in Remedy Kombucha in May following investments in Good Buzz Kombucha in New Zealand and Schibello Coffee in Australia last year.