East African Breweries Limited (EABL) announced a pre-tax profit of Kshs10.6 billion during the half-year ending 31 December 2019, representing a 9% increase compared to the same period last year. Profit after tax also grew at the same rate, reaching Kshs7.2 billion during the period under review.
With the three brands alone raking in about 71% of EABL sales in Kenya, the half year financial report also reveal that net sales in EABL’s largest market, Kenya, grew by 8%, with beer and spirits growing by 6% and 11%, respectively.
The results indicate that the total volumes of alcohol traded by the company increased by 5% in the last six months. The company now expects to pay an approximate Ksh2.4 billion to investors as share dividends, a 20 % rise in dividend payouts from about Ksh2.5 per share to Ksh3 per share in the last financial year.
With the decline in sales of bottled beer in Kenya due to excise tax driven price increase, EABL says the Senator Keg brand has grown due to improved routes to its core markets in the last six months. The results indicate the company saved as much as Ksh1.5 billion in cost of sales from local sourcing and procurement as well as process loss reduction and lower distribution costs.
“We are pleased by this performance. Although excise duty escalation on alcoholic beverages in Kenya’s last budget impacted bottled beer, a more stable operating environment provided an opportunity to continue our growth momentum during the period. We remain cautiously optimistic about our second half of the year, although unpredicted tax and regulatory changes and challenges in our operating environment continue to present potential risks in the horizon,” said Andrew Cowan, EABL Group Managing Director.
“We will continue to focus on the execution of our strategy across our businesses. We are confident there is ongoing potential for growth across our geographies and categories. At the premium end, people are trading up while at the price-sensitive end, we believe we can reduce more illicit alcohol consumption by offering safe, quality options,” he added.
EAB’s strong performance in Tanzania is majorly driven by its Serengeti Lite line of beer. Having made a total investment of Kshs 14 billion in the Kisumu brewery in Kenya in the previous years, the Group has invested a further Kshs 4.4 billion in production capacity improvements for existing and new brands.
To give back to society, the company has been involved in Project Heshima that recruited one thousand youths and women who are susceptible to the production and consumption of illicit brews for vocational training as well as championed the grain to grass Mtama Ni Mali Programme offering support to local farmers through extension services. EABL also launched new barley varieties with which farmers have reported significant increase in yields and greater resistance to water logging.
East African Breweries is now pleading with the government of Kenya to reign-in on runaway excise duty taxation that has seen prices of alcoholic products spiral out of control for many who are battling tough economic times. “Excess duty undermines business growth. Our prayer is that we can continue to meaningfully engage the government of Kenya in the conversation regarding taxation so as to stabilize prices for the benefit of consumers,” said Jane Karuku, Managing Director Kenya Breweries.