EABL posts improved 4.7 pc revenues driven by Tanzania, Kenya business
What you need to know:
- However, EABL’s after-tax profit for the six months to December dipped 11.3 per cent to $48.4 million following a weak performance by the Kenyan market and higher costs.
East African Breweries Limited (EABL)’s revenues improved 4.7 per cent to close the half-year at $359.5 million, driven by its bottled beer business in Kenya and Tanzania and the spirits segment.
However, EABL’s after-tax profit for the six months to December dipped 11.3 per cent to $48.4 million following a weak performance by the Kenyan market and higher costs.
EABL’s beer business were however pulled back by a depressed performance in Kenya (extended electioneering) and Uganda (higher excise tax) while higher sales and advertising costs further ate into its top-line.
“It is encouraging that bottled beer is in recovery and mainstream spirits continues to grow strongly,” Andrew Cowan, EABL’s managing director, said in a statement.
“Our increased investment behind our brands in sales and advertising underlines our bold strategy to pursue existing and emerging growth in all segments of our business.”
The brewer cost of sales increased by $21.7 million to $203.2 million while other costs also went 1.4 per cent to $84.9 million as the brewer rolled out more campaigns to spur consumption.
EABL’s parent firm Diageo Thursday further disclosed that Tusker sales increased one per cent while Guinness improved three per cent, bucking recent trends, while Senator Keg sales dipped.
Mainstream beers have in recent years come under pressure from excise tax increases, with the resultant higher retail prices pulling sales.
The brewer has in response revved up its innovation unit (occasioning the launch of brands like Kenya Cane Coconut, Uganda Waragi Coconut, Chrome Vodka and Tusker Cider) and increased its investment in spirits.
These new brands added 74.3 million to the total revenue in the period under review, EABL said.
“We have refreshed our focus around our marketing strategy, expanding our route to consumer to broaden the reach of our products across markets whilst innovating at scale,” Mr Cowan said.
Senator Keg has also been a point of focus by the brewer with a plans to build $146.6 million factory in Kisumu to boost production.
In the period under review, the brewer spent $48.9 million in capital expenditure to boost the manufacturing capacity of spirits and value beer.
Despite the drop in profitability, the brewer’s board retained the proposed interim dividend at $0.02 per share. (Business Daily)
