Danish Royal Unibrew (ROYUF) just released its annual report this week, and its numbers were amazing. Sales, income, dividends and Ebitda percentages all increased.
The stock doesn’t trade in the U.S. but has performed very well. It trades for 501 Danish krone, there are 50 million shares and the market cap is 25 billion krone ($3.8 billion). Earnings per share increased 29% to 20.6, and the price-earnings ratio is 24. The dividend is 10.8 krone, which is an increase from 8.9 krone last year. The dividend yield is 2.16%.
Sales for 2018 grew 14% to 7.3 billion krone ($1.1 billion). Of the top-line growth, 9% was organic and 5% was through M&A. Unbelievable growth! Ebitda margins were 18.4%.
This year, management plans to buy back 400 million krone ($63.5 million) of shares. That works out to about 800,000 shares.Â
Guidance for 2019 is for sales to range from 7.4 billion krone ($1.12 billion) to 7.65 billion krone ($1.16 billion). Ebitda guidance is 1.34 billion ($203 million) krone to 1.456 billion krone ($221 million).
Forty-four percent of sales come from the Baltics, 47% from Western Europe and 9% from international. Sixty-eight percent of the brands are mainstream, 29% premium and 3% craft. Thirty-eight percent is beer, 13% other alcoholic beverages and 49% is nonalcoholic. It is amazing what a high percentage of nonalcoholic sales Unibrew has.
Growth has been high. Sales grew from 6 billion krone ($909 million) in 2014 to 7.3 billion krone ($1.1 billion). Earnings grew from 624 million krone ($95 million) to 1 billion krone ($152 million). Unbelievable!
Some of the better known brands include: Royal Beer, Schiøtz, Lottrup, Kissmeyer, Anarkist, Albani, Ceres, Thor, Karjala, Lapin Kulta, Aura, Lahden Erikois and Polar Monkey. Unibrew is also the Pepsi distributor for Denmark. The company has other soft drinks, bottled water and juices.
My firm bought the stock two years ago and are at an 81% profit. At the time, we were the only firm on Charles Schwab’s platform to own shares. Schwab had to buy overnight in Denmark (it was night here in the U.S., not Denmark).
While everyone else was wasting their time and money looking at giants like AB Inbev (BUD), we were digging around, doing extra research. But it seems often that these big blue chips run out of steam and the stocks don’t go anywhere. And the mutual funds and index funds that hold them do not profit. Even with a $3.8 billion market cap, Unibrew is still small in the grand scheme of things.
When we first bought the stock, Michael Rasmussen of ABG Sundal Collier thought the stock was a dud. Boy was he wrong! Only European banks follow Unibrew.
Last year, Unibrew purchased German Bev.Con ApS, whose better-known brands include Cult Energy, Shaker and Mokai. It also purchased France’s Etablissements Geyer Fréres.
I love the stock. It’s about perfect -- increasing sales and revenues, high profit margins, rising dividends and share buybacks. I also love that it gets no mention in the U.S. Investors can find only two articles, both of which I have written. I suggest you follow Unibrew. To the best of my knowledge, its stock has killed the other brewers over the last few years.
Disclosure: We own shares.
