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NEWS & CURRENT AFFAIRS

The Nairobian

EABL reports 40 per cent jump in full-year profit to Sh9.5 billion

Business

By Paul Wafula | Aug 01, 2015

East Africa Breweries Ltd Group Managing Director Charles Ireland (centre) speaks to journalists during the release of the annual financial report for the year ended June 30, 2015, yesterday, flanked by Chairman Charles Muchene (right) and Kenya Breweries Managing Director Jane Karuku. [PHOTO:WILBERFORCE OKWIRI/STANDARD]

East African Breweries (EABL) has reported a 40 per cent rise in profit after tax for the full year ending June 30, 2015. The brewer said its net profit has risen to Sh9.5 billion in the last financial year, up from the Sh6.8 billion in 2014.

Shareholders will also win big after the firm handed them a final dividend of Sh6 a share, a 50 per cent hike. Its biggest shareholder is British beer conglomerate, Diageo.

The beer maker attributed the rise to double digit growth in spirits and premium beers. “Overall, we believe these results are satisfactory given the economic conditions across East Africa. We have consistently invested in our people, our brands and our business infrastructure and these investments are paying off,” EABL Group Managing Director Charles Ireland said yesterday at a briefing in Nairobi.

Contain costs

The company grew its revenue by six per cent in the year under review to Sh64.4 billion. Its costs of sale grew at the same pace as its revenue, even after the firm struggled to contain them. Kenya continued to be the biggest contributor to its business, accounting for two thirds of its revenues. Uganda contributed 18 per cent, Tanzania 11 per cent. Tanzania was the only market that registered a decline in its revenue contribution to the group.

Keep Reading business

The group is struggling to grow its beer brands in the local market, most of which have reported flat or negative growth. Tusker, its flagship beer, combined with its other mainstream beers, recorded a two per cent decline in sales.

The firm is now counting on its spirits and premium beer market to offset the losses from its mainstream beers. “I am disappointed that we did not grow our mainstream beer but we are hoping to be more creative going forward,” Ireland said. “Some consumers are moving to the premium beers and because they cost more, the net effect is positive.”

The company had hoped that the visit by Us President Barack Obama last weekend for the Global Entrepreneurship Summit would give it impetus to market Tusker to the world if the US leader was convinced to take a sip of its beer.

This did not happen. “We believe that Tusker is one of our products that can end up on the international market. We would like Tusker to be just as popular in London as it is in Nairobi and Mombasa,” Ireland said. The firm is selling one its subsidiary, Central Glass Industries Ltd to South Africa’s Consol Glass Proprietary, of which it hopes to get about Sh4.5 billion.

Brewing business

This will be reflected in the current financial year. The firm maintained that it decided to sell land and other assets that were not core to its business to generate the necessary capital to run its brewing business. EABL also warned that the new excise laws introduced by Parliament stand to hurt the industry if implemented the way they were.

It has however welcomed the reduction in taxes for the Senator Keg brand that targets the lower segment of the market. “Volumes have already doubled since the excise taxes were reduced and this is positive,” the firm said. The firm has already passed on this cost to consumers after it lowered the prices of Senator Keg from Sh30 to Sh25 for half-litre mug.

The beer maker said it supports the crackdown on illicit brew but called on State agencies involved not to target legitimate alcohol. It did have an estimate of the losses its dealers have so far incurred during the crackdown.