EABL Full Year Profits Down By 39% To KSh 7 Billion

By Soko Directory Team / Published July 30, 2020 | 3:51 pm

East African Breweries Limited (EABL) recorded a 9 percent decline in net sales for the financial year ended 30 June 2020, as first-half growth of 10 percent was offset by a 29 percent decline in the second half.

The second half decline was due to the impact of the Covid-19 pandemic which saw containment measures implemented across East Africa from late March 2020.

The pandemic impacted EABL’s business performance after three consecutive double-digit halves of growth, with profit for the year declining by 39 percent to 7 billion shillings from 11.5 billion shillings in the previous year.

According to EABL, the Kenyan market declined 14 percent versus the prior year. First-half growth of 8 percent was offset by the second-half decline of 37 percent, as the partial lockdown from March to June led to the closure of bars and restaurants.

Mainstream and value spirits remained resilient and registered 2 percent growth versus prior year as the category benefitted from a shift of outlet consumption occasions to at-home consumption.

The Ugandan market declined 5 percent versus the prior year, as first-half growth of 10 percent was offset by the impact of a total lockdown from March to June resulting in a 21 percent decline in sales in the second half.

The Tanzanian market grew 14 percent versus the prior year, as first-half growth of 19 percent slowed down to 10 percent in the second half as Government restrictions in response to Covid-19 were limited.

Double-digit growth in premium and mainstream beer segments and improved spirits performance supported a strong delivery for the financial year.

EABL Group MD and CEO, Andrew Cowan, said: “During this unwelcome pandemic, our top priority has been to safeguard the health and well-being of our people and support our communities while taking necessary action to protect our business. Across the markets, we have tracked changes in consumer behavior and repurposed our execution plans in trade to continue serving our consumers where safe and possible to do so.”

Mr. Cowan said EABL focussed on managing working capital tightly in the last quarter, reducing discretionary expenditure and reallocating resources such as advertising and promotion (A&P) spend to new and emerging channels in order to serve our consumers safely.

EABL has made a significant contribution through trade and community initiatives across the region. To help East African communities emerge from the effects of the pandemic, EABL has funded the provision of hand sanitizers distributed to frontline health workers and vulnerable communities to the tune of 70 million shillings. Further, the company donated Kshs 50 million to Kenya’s Covid-19 Emergency Fund, bringing the total contribution towards the pandemic to Kshs 120 million.

In Uganda, UBL donated hospital mattresses, hand-washing stations, and fuel to enable frontline health workers to alleviate situations in healthcare centers. And in Tanzania, SBL delivered a hygiene awareness program and donated hand-sanitizers to help combat the spread of the pandemic.

In view of the pandemic’s impact on bar owners across East Africa, EABL is committing KShs 500 million to support the recovery of on-trade outlets in Nairobi, Kampala, and Dar es Salam as part of Diageo’s $100 million ‘Raising the Bar’ global fund. This funding will be used to support the implementation of hygiene measures, provision of practical equipment, and provision of free digital support and training to enable outlets to transform how consumers will be served when bars reopen.

“Going forward, our market teams have put in place robust plans to help us emerge stronger from this crisis once the measures are eased across our markets. We will continue to execute with discipline and invest prudently to ensure we are strongly positioned for a recovery in consumer demand,” Mr. Cowan said.

In recognition of the uncertainty in the external environment in the face of the Covid-19 pandemic and the need to conserve cash to support the business, the Board of Directors does not recommend a final dividend. Consequently, the interim dividend of KShs 3 per share paid in April 2020 will be the full and final dividend for the year.

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