March 08, 2015

Emperador posts 5% rise in 2014 net income

In a press statement, Emperador Inc (EMP) announced net income for 2014 reached P6.1b, up 5% YoY. This was on the back of a 7% revenue growth which was weighed by competition and lower volumes. The company is anticipating a better 2015 when it starts to benefit from its Whyte and Macay acquisition and expand business not just in the Philippines but globally as well.

For 2015, the company expects revenue growth of at least 35% as it is slated to launch EMP products from Spain and the Philippines in several European countries, Africa and Duty Free travel retail shops globally. Moreover, it expects to launch eight major liquor products in the Philippines to cover all segments and categories in the market.

Our take: EMP’s full-year income accounted for 98% of consensus forecast. The almost flat income growth of EMP came as no surprise given the challenges faced by the domestic liquor market. With growth of the total domestic liquor industry being either flat or slightly negative for the past couple of years and competition heating up, we believe the move of EMP to expand outside the Philippines to be a good strategic move.

Its international expansion through acquisitions should enable the company to expand its overseas distribution network while providing a boost to its local expertise into its target markets. It remains to be seen however how EMP can address tight domestic competition and win back market share lost to aggressive competitors. – WealthSec