- Profit after tax from continuing operations grew by 2%
- Operating margin improved to 27% from 25% due to strong cost control
- Interim dividend of Ksh 2.00 per share
East African Breweries Limited (EABL) today announced its half-year results for the six months ended 31st December 2016, delivering a 2% growth in profit after tax from continuing operations. The results were achieved despite significant excise tax increase in Kenya last year, which affected its sales volume, as well as tough economic and operating conditions elsewhere in the region.
Key Performance Highlights:
- Kenya delivered flat net sales with double-digit growth in Spirits and Senator Keg. However, beer performance was mixed: premium and mainstream segments continued to decline as a result of the excise tax increase.
- Uganda recorded 7% growth in net sales mainly driven by good performance from emerging beer and spirits. EABL continues to focus on upgrading of its sales force and building stronger distribution partners within the region.
- Tanzania faced a challenging consumer environment which negatively impacted consumer spend. Despite double-digit growth in Pilsner and triple-digit in reserve spirits, net sales declined by 7%.
- EABL’s performance was further enhanced by our innovation pipeline including Tusker Cider, Smirnoff Ice Electric Ginseng and Black Bell.
- Savings in cost of sales and strong control of selling, distribution and administrative expenses drove operating margin to improve from 25% to 27%.
- Capital expenditure for the period was Ksh 1.8 billion, a growth of 14% from last year spent on increasing capacity, improving efficiency, quality and safety of our operations thereby reflecting our confidence in the future of the business.
Commenting on the results, Andrew Cowan, EABL Group Managing Director and CEO said: “The fantastic results in spirits, Senator and emerging beer helped boost our numbers on the back of a challenging operating environment marked by a tough excise tax environment in Kenya and economic difficulties especially in Tanzania. We continue to invest behind our capacity, people, brands and innovation to ensure we are tapping in to existing, emerging and changing consumer needs. These will be our key drivers in ensuring our future success in the region”.
In addition, Mr. Cowan said the industry will continue to engage various stakeholders, including the Kenyan government, with a view to devising a predictable tax environment that will help drive future investment in the sector. Because Kenya contributes over 70 percent of EABL’s profits, the prevailing tax regime in the region’s biggest economy has significantly affected the Group’s earnings.
“There has been four major excise duty increases affecting bottled beer volumes in the last five years, with the most aggressive one taking effect in December 2015 – a 43 percent rise in duty. This was the highest excise duty increase in Africa and considering the prevailing inflationary pressure in the economy, we still experienced a 5 percent increase in volume, he added.
The Board of Directors recommended an interim dividend of Ksh 2.00, unchanged from last year.
For further information please contact:
Head of Communications and Media
T: +254 (020) 86244000
East African Breweries Limited
East African Breweries Ltd (EABL) is East Africa’s leading branded alcohol beverage business with a collection of beer, spirits brands and adult non-alcoholic drinks (ANADs). EABL is one of the largest Kenyan tax payer remitting over Kshs 40 billion in taxes to the exchequer.
The company has strong brands and a proven business model whose geographical diversity across the EAC region gives it an attractive long-term opportunity given the forecast high growth rates of the regions consumer economies. With breweries, distillers, support industries and a distribution network across the region, EABL is in Nairobi, Kampala and Dar es Salaam securities exchanges.