Earnings UpdateEABL Reports a 1% Drop in Profit to Kes 6.96 Billion, Citing Tough Operating Environment

East African Breweries Limited (EABL) has posted a profit after tax of  Kes 6.96 billion for the period ended 30th June 2021, a 1% drop compared to the Kes 7.02 Billion recorded last year.

The group highlighted the tough operating environment caused by the prevailing COVID-19 pandemic in East Africa that has seen countries put in place measures to fight the pandemic, resulting in a decline in disposable income. The rising inflation rate coupled with currency depreciation in the region has also contributed to the decline in disposable income, affecting affordability.

EABL recorded a 15% growth in revenue to Kes 86.0 billion from Kes 74.92 billion recorded in 2020. The performance was attributed to the company’s response to the new realities by investing behind the brands (leveraging changing consumer behaviour and channel shifts), expanding capacity, and sustaining productivity initiatives to manage the cost base to ensure they emerge stronger.

Sales in the Kenyan market rose 11 per cent, particularly in spirits, while demand for beer was hurt by restrictions, including the closure of bars and night-time curfew, which reduced drinking hours at social joints.

Uganda’s sales grew by the largest margin of 24 per cent, helped by increased demand for beer and production capacity expansion. Sales in Tanzania increased 10 per cent.

The higher turnover was accompanied by cost escalation across production, distribution and other areas, holding down the bottom line.

Additionally, selling and distribution costs increased by Kes 771 million to Kes 7.3 billion. The company invested Kes 7.8 billion in the period, a move set to support growth.

EABL Outlook and Dividend

The group highlighted the uncertainty that the COVID-19 pandemic has brought about; however, they expressed confidence in their strategy and said they would continue to focus on business recovery to grow the top line and recover margin.

The board of directors did not recommend the payment of an interim dividend.

“In recognition of the continued uncertainty in the external environment due to Covid-19 related restrictions, the Directors do not recommend a final dividend”.EABL said in a statement.

 

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