EABL half-year profit down 22% to Sh6.8bn on tough economy

Group’s bottom-line impacted by input cost inflation, local currency devaluation and escalating interest rates.

In Summary

•Net sales up 16 percent to Sh66.5 billion, on portfolio expansion and commercial execution.

•Directors recommended an interim dividend of Sh1 per share, to be paid on or about April 26, 2024.

Production at the East African Breweries Limited plant in Nairobi/FILE
PAYMENT: Production at the East African Breweries Limited plant in Nairobi/FILE

East African Breweries has reported a 22 per cent decline in half-year net profit for the period ended December 2023, as the brewer navigated a tough operating environment.

Profit after tax  went down to Sh6.8 billion compared to same period last year, primarily driven by macro-economic-driven cost inflation and rising finance costs.

This wiped out gains made in net sales for the period which increased 16 per cent to Sh66.5 billion  compared to prior year.

EABL Group’s volumes increased by two per cent, lifted by resilient consumer demand, management said, as markets leveraged a strong and expanding portfolio "with brilliant commercial execution."

The Group reported net sales growth across the three markets: Kenya at 10 per cent, Uganda at 31 at percent and Tanzania at nine per cent.

Additionally, beer and spirits categories grew at 18 per cent and 13 per cent, respectively.

The devaluation of local currency has however resulted to forex loss of Sh 2.3 billion, an increase of Sh2.1 billion versus same period last year

EABL Group Managing Director and CEO, Jane Karuku, said the firm has achieved a resilient set of results in the half-year period, with its brand building, commercial execution, as well as consumer insight leading innovation allowing continued revenue growth.

"However, our bottom line has been impacted by increased costs of inputs, currency devaluation and rising interest rates," Karuku said.

"Following the commissioning of our microbrewery, we have accelerated the launch of exciting beer and cider propositions. We continued to deliver on our Environmental, Social and Governance (ESG) strategy, yielding positive results around water efficiency and carbon footprint.”

EABL continued to invest behind its brands with advertising and promotions spend rising 16.5 per cent to Sh6.1 billion.

The company’s Sh1.2 billion microbrewery in Kenya started producing during the half.

Looking ahead, Karuku said: “Our priorities for the second half are clear: we will remain consumer-centric and execute brilliantly to keep up with the dynamism in the market, drive cost efficiencies to grow margins and invest smartly in our brands and business."

Further, she said the group will continue to deliver against its ESG commitments, whilst driving high performance culture and engagement of the people.

The EABL board has recommended an interim dividend of Sh1 per share to be paid on or about April26, 2024.

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