BAD TIMES

EABL profit drops 39% as Covid-19 bites

Profit was Sh7 billion from Sh11.5 billion

In Summary

•Sales in Kenya and Uganda declined by 14% and 5% respectively while Tanzania grew 14% on the back of less stringent restrictions.

•Sh3 interim dividend will be the full and final dividend for the year.

East Africa Breweries beer production at Ruaraka.
East Africa Breweries beer production at Ruaraka.
Image: FILE

East African Breweries Limited (EABL) recorded a nine per cent decline in net sales for the financial year ended 30 June 2020, as the effects of Covid-19 wiped out gains.

A first half growth of 10 per cent was offset by a 29 per cent 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 per cent to Sh7 billion from Sh11.5 billion in the previous year.

First half growth in Kenya, of eight per cent, was offset by second half decline of 37 per cent , as the partial lockdown from March to June led to closure of bars and restaurants.

Mainstream and value spirits remained resilient and registered two per cent growth versus prior year as the category benefitted from a shift of outlet consumption occasions to at-home consumption, the firm said in a statement.

Uganda declined five per cent compared to last year as first half growth of 10 per cent was offset by the impact of a total lockdown from March to June, resulting in a 21 per cent decline in sales in the second half.

Tanzania market, however, grew 14 per cent compared to the previous year.

First-half growth of 19 per cent, however, slowed down to 10 per cent 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 behaviour and repurposed our execution plans in trade to continue serving our consumers where safe and possible to do so,” he added.

Cowan said EABL focussed on managing working capital tightly in the last quarter, reducing discretionary expenditure and reallocating resources such as advertising and promotion 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 provision of hand sanitisers distributed to frontline health workers and vulnerable communities to the tune of Sh70 million.

Further, the company donated Sh50 million to Kenya’s Covid-19 Emergency Fund, bringing the total contribution towards the pandemic to Sh120 million.

In Uganda, UBL donated hospital mattresses, hand-washing stations and fuel to enable frontline health workers to alleviate the situation in healthcare centres.

In Tanzania, SBL delivered a hygiene awareness programme and donated hand-sanitisers to help combat the spread of the pandemic.

In view of the pandemic’s impact on bar owners across East Africa, EABL has committed Sh 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,” 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 have not recommended a final dividend.

Consequently, the interim dividend of Sh3 per share paid in April 2020 will be the full and final dividend for the year.