Lion Brewery (Ceylon) PLC Annual Report 2011 - Carson and ...

Chief Executive’s Review Cont.
11
Lion Brewery (Ceylon) PLC
Annual Report 2011
The Year Ahead
There is no doubt that the Sri Lankan economy will continue its strong growth momentum into the
year ahead. Notwithstanding inflationary pressures, consumer confidence remains high & businesses
across a range of sectors are expected to do well in the year ahead. The budget proposals announced in
November 2010 will spur development in general & the private sector in particular. The expanding stock of
infrastructure including the road modernization program will also be a catalyst for growth. In many ways, a
“new” Sri Lanka is emerging & this is best demonstrated in Colombo; the city is finally taking the shape of
a major, modern, Asian metropolis thanks largely to the work of the UDA.
There are however some downsides to the economy in 2011. Principal amongst these is inflation.
Commodity prices across the world are on the rise & will likely continue to do so for the foreseeable future.
In the meanwhile the unrest in the Middle East has the potential to drive up further the price of oil. Since
Sri Lanka is an import dependent economy, the consequences of such price increases on the Country’s
trade balance & currency are of concern. Inflation restricts discretionary spending & will, to some degree,
inhibit the growth of consumer goods businesses such as Your Company.
Overall, however, the expanding economy will provide many an opportunity for growth. Your Company
is well positioned to capture the growth that the market offers. More importantly, it is well positioned to
create growth opportunities for itself and the industry.
Whilst management took full advantage of the market opportunities presented during the year under
review, it also focused on structuring the Company to face the future aggressively & with confidence.
Corona – the iconic beer from Grupo Modelo, Mexico – will be added to the Company’s portfolio shortly.
The brand brewed exclusively in Mexico & commonly served with a wedge of lime, is one of the top selling
beers in the world. Lion, Carlsberg & Corona is a brilliant combination & caters to all segments of the
market.
Over the years, the Company’s distribution system has been highly effective. In the year ahead a few
significant changes will make the system even more effective & less expensive per unit of beer sold.
Brewing capacity will be enhanced again during the year ahead to ensure that the market is well supplied
with no shortages. The on going consolidation of the IT system will tightly knit the Company’s operations
into a single seamless supply chain. Management has also put in a new structure that is squarely focused
on growth & value addition. New aggressive targets have been set across the Company & the Lion team is
well prepared for the hunt that lies ahead.
Thus there is confidence in the future of Your Company. Yet, the fortunes of Your Company and those of
others that operate in the Sri Lankan environment are inescapably linked to the progress of the Nation.
Since the conclusion of the war, there has been much progress. The necessary stock of infrastructure
is being put in place, there has been some consolidation in the system of taxation, the currency has
stabilized, education reforms are being discussed and inflation has largely been under control. The
economy has responded strongly to these interventions & will continue to grow into the year ahead.