Kopparberg Brewery: 2015 Update

Year-End Report 2015: Another Year of Profitable Growth

Kopparberg Brewery reported fourth-quarter and full-year results last Friday, showing strong growth in revenues, operating earnings and shareholders’ equity. Revenues rose 10.1 % to SEK 1,970.2 million from SEK 1,797.2 million a year earlier. Operating earnings rose 37.5 % to SEK 307.1 million from SEK 223.4 million. Book value per share at the end of 2015 was SEK 24.59, an increase of 44.2 % from SEK 17.05 the prior year. Earnings per share during the increased to 34.8 % to SEK 9.94 from SEK 7.37.

In the year-end report Peter Bronsman (CEO) comments on Kopparberg’s strong development during 2015, that he attributes to an ongoing focus on Kopparberg’s strong brands and export markets where Kopparberg Cider has developed into a strong product.

As the graph below shows, growth in earnings, dividends, and book value per share from 2004 up until today has been pretty good.


Quantitative Review

Revenue growth of 10.1 % in 2015 coupled with a higher operating margin, 15.5 % in 2015 compared to 12.4 % in 2014, resulted in an increase in operating earnings (EBIT) of 37.5 %. Capital efficiency measured as invested capital turnover improved, and both these factors resulted in a higher pre-tax return on invested capital of 44.8 % compared to 38.5 % in 2014.

The proposed dividend in 2015 is SEK 4.40 (2.40), an increase of 47.7 % from a year earlier.

See table below for financial key metrics for the twelve years from 2004 to 2015, a period in which Kopparberg’s growth has been nothing but impressive.


Drivers of Return on Invested Capital

The table below shows a breakdown of the two main drivers of return on invested capital, EBIT-margin and capital turnover. During the last twelve-year period most of the improvement seen in pre-tax ROIC was due to the increase in the EBIT-margin, rising from 3.7 % in 2004 to 15.5 % in 2015. Capital turnover has fluctuated between 3 to 4 times in this period, showing a positive trend between 2011-2015.


Annual Report 2015

The 2015 annual report will be published on Kopparberg’s website on May 5, 2016. I will post another blog then with some more analysis about, among other things, revenues, expenses, breakdown of invested capital, and cash flows etc.

Click here to read the year-end report (only a Swedish version available).

Disclosure: I have no position in the stock mentioned, and no plans to initiate any position within the next 24 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. This article is informational and is in my own personal opinion. Always do your own due diligence and contact a financial professional before executing any trades or investments.


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