East African Breweries Limited posted Sh8.5 billion after-tax profits for the year that ended 30 June. This is however Sh1.8 billion less compared to last year’s figure of Sh10.3 billion.
Regionally, Kenya which accounts for 75 per cent of EABL’s business registered a four per cent while Uganda which hosts 16 per cent of the firm’s business grew by seven per cent.
This was despite high excise tax and drought-related inflation which made alcohol and leisure less affordable for consumers in the region
The growth was also largely slowed by the decline of South Sudan and Burundi businesses due to political instability.
Tanzania, which accounts for nine per cent of EABL’s business in the region, declined by 12 per cent.
I’m pleased with these results, coming on the back of a fairly difficult trading environment for our business. We demonstrated resilience delivering this solid set of financial results despite challenging times, mainly characterised by inflationary pressures and regulatory volatility,’’ said Andrew Cowan, EABL group managing director.
The group’s sales were up two per cent, with volumes growing by five per cent, thanks to good performance in mainstream spirits and value beer which grew double digits.
The spirits business grew by 14 per cent, with Kenya Cane and Johnnie Walker posting 46 and 17 per cent growth respectively.
However, the group’s beer business shrunk marginally, with mainstream and premium beers going down six and eight per cent respectively. The negative growth was however balanced by a seven per cent growth in value driven by Senator and Balozi.
“The investments made in our systems, brands and people will help us to take full advantage of these opportunities. We will continue to focus on innovation and prudent cost management and remain flexible to anticipate and respond to external factors in the region,”explained Cowan.
Net capital expenditure spend was reduced by Sh2.3 billion through better supply chain management and standardisation in manufacturing. Total group net borrowings decreased by three per cent in improved liquidity.
Operating cash flow increased by a whopping 112 per cent from last year’s Sh27.9 billion. The firm restructured its balance sheet, strengthening its financial position in the year under review, after the assurance of Sh6 billion medium term note at the Nairobi Securities Exchange in March 2017.
The group’s capital expenditure rose 14 per cent to Sh5.7 billion as it continued to invest in production capacity for beers and spirits and increasing quality environmental efficiencies of its operations.
The firm recently announced Sh15 billion investment in Kisumu brewery aimed at increasing production capacity for Senator brand in the next two years.
Cowan said the plant,to be funded through borrowing and internal capital is expected to have a multiplier effect, potentially creating 110,000 jobs across the value chain.