East African Breweries Defies High Taxes To Post Ksh 7.2 Billion In Profits

By Soko Directory Team / January 31, 2020 | 12:26 pm




East African Breweries Limited (EABL) has announced a pre-tax profit of Kshs 10.6 billion during the half-year ending 31 December 2019, representing a 9 percent increase compared to the same period last year.

Profit after tax also grew at the same rate, reaching Kshs 7.2 billion during the period under review.

Net sales were up 10% to Kshs 45.9 billion, driven by higher volumes, up 5 percent across the Group and categories, and better price mix across all brands. East Africa’s largest manufacturing company leveraged increased investment and operational efficiencies across markets and segments to expand, despite increases in alcoholic beverage taxes.

Net sales in EABL’s largest market, Kenya, grew by 8 percent, with beer and spirits growing by 6 percent and 11 percent respectively.

The market registered outstanding performance in Senator keg, with the iconic, low-priced beer growing by a fifth, with the new Kisumu investment driving growth. Mainstream spirits and Scotch whiskey sales increased by 17 percent and 23 percent respectively, with the remarkable performance of Black & White.

The increase in excise duty drove bottled beer decline of -1%, despite successful brand campaigns such as Tusker Na Nyama and Guinness Football.

Uganda Breweries’ premiumization agenda delivered better mix and margins, helping lift net sales by 10 percent, driven by 15 percent growth in beer and 1 percent in spirits, the latter was also impacted by the ban of the sachet format.

Marketing campaigns such as Bell All-Star Tour and Tusker Lite Neon Experience helped drive bottled beer growth by 15 percent. Launch of Black & White whisky helped lift Uganda’s Scotch performance with net sales rising by 84 percent while the ready-to-drink category grew by 18 percent.

Serengeti Breweries in Tanzania, the Group’s fastest-growing business, expanded by 19%, lifted largely by consistent performance in local executions to drive the Serengeti trademark. EABL leveraged several innovation initiatives during the half-year, with new brands contributing 28 percent of the net sales.

Recently launched brands such as Hop House 13 Lager, Guinness Smooth, Sikera Cider, Black &White whisky, and Triple Ace vodka contributed significantly to growth.

Commenting on the first half, EABL Group Managing Director and CEO, Andrew Cowan, said: “We are pleased by this performance. Although excise duty escalation on alcoholic beverages in Kenya’s last budget impacted bottled beer, a more stable operating environment provided an opportunity to continue our growth momentum during the period. We remain cautiously optimistic about our second half of the year, although unpredicted tax and regulatory changes and challenges in our operating environment continue to present potential risks in the horizon.”

He added: “We will continue to focus on the execution of our strategy across our businesses. We are confident there is ongoing potential for growth across our geographies and categories. At the premium end, people are trading up while at the price-sensitive end, we believe we can recruit more illicit alcohol consumption by offering safe, quality options.”

EABL will invest further during the financial year, to consolidate gains so far made in its production, commercial and sustainability capacities across the region. Having made a total investment of Kshs 14 billion in the Kisumu brewery in the previous years, the Group has invested a further Kshs 4.4 billion in production capacity improvements for existing and new brands.

As part of the recently announced Kshs 22 billion sustainability investment to be spent across East Africa, EABL has embarked on projects across East Africa to leverage renewable energy in biomass and solar as well as water recovery and treatment. These sustainability plans are geared towards reducing carbon emissions by 42,000 tonnes, save over a billion cubic liters of water annually and produce up to 10% EABL breweries’ power needs.

The Board of Directors has recommended an interim dividend of Kshs 3 per share for the half-year period. This represents a 20% increase from Kshs 2.50 compared to the same period last year.





About Soko Directory Team

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system.Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory

View other posts by Soko Directory Team


More Articles From This Author







Trending Stories










Other Related Articles










SOKO DIRECTORY & FINANCIAL GUIDE



ARCHIVES

2020
  • January 2020 (272)
  • February 2020 (310)
  • March 2020 (390)
  • April 2020 (322)
  • May 2020 (330)
  • 2019
  • January 2019 (253)
  • February 2019 (216)
  • March 2019 (285)
  • April 2019 (254)
  • May 2019 (272)
  • June 2019 (251)
  • July 2019 (338)
  • August 2019 (293)
  • September 2019 (306)
  • October 2019 (313)
  • November 2019 (362)
  • December 2019 (320)
  • 2018
  • January 2018 (291)
  • February 2018 (219)
  • March 2018 (278)
  • April 2018 (225)
  • May 2018 (238)
  • June 2018 (178)
  • July 2018 (256)
  • August 2018 (249)
  • September 2018 (256)
  • October 2018 (287)
  • November 2018 (284)
  • December 2018 (185)
  • 2017
  • January 2017 (183)
  • February 2017 (194)
  • March 2017 (207)
  • April 2017 (104)
  • May 2017 (169)
  • June 2017 (205)
  • July 2017 (190)
  • August 2017 (195)
  • September 2017 (186)
  • October 2017 (235)
  • November 2017 (253)
  • December 2017 (266)
  • 2016
  • January 2016 (165)
  • February 2016 (165)
  • March 2016 (190)
  • April 2016 (143)
  • May 2016 (245)
  • June 2016 (182)
  • July 2016 (271)
  • August 2016 (248)
  • September 2016 (234)
  • October 2016 (191)
  • November 2016 (243)
  • December 2016 (153)
  • 2015
  • January 2015 (1)
  • February 2015 (4)
  • March 2015 (166)
  • April 2015 (108)
  • May 2015 (116)
  • June 2015 (120)
  • July 2015 (148)
  • August 2015 (157)
  • September 2015 (188)
  • October 2015 (169)
  • November 2015 (173)
  • December 2015 (207)
  • 2014
  • March 2014 (2)
  • 2013
  • March 2013 (10)
  • June 2013 (1)
  • 2012
  • March 2012 (7)
  • April 2012 (15)
  • May 2012 (1)
  • July 2012 (1)
  • August 2012 (4)
  • October 2012 (2)
  • November 2012 (2)
  • December 2012 (1)
  • 2011
    2010
    2009
    2008
    2007
    2006
    2005
    2004
    2003
    2002
    2001
    2000
    1999
    1998
    1997
    1996
    1995
    1994
    1993
    1992
    1991
    1990
    1989
    1988
    1987
    1986
    1985
    1984
    1983
    1982
    1981
    1980
    1979
    1978
    1977
    1976
    1975
    1974
    1973
    1972
    1971
    1970
    1969
    1968
    1967
    1966
    1965
    1964
    1963
    1962
    1961
    1960
    1959
    1958
    1957
    1956
    1955
    1954
    1953
    1952
    1951
    1950