East African Breweries Limited (EABL) has announced a
pre-tax profit of Kshs.10.6 billion during the half-year ending 31 December
2019, representing a 9% increase compared to the same period last year.
The Profit after tax also grew at the same rate, reaching Kshs.7.2
billion during the period, with net sales going up 10% to Kshs.45.9 billion,
driven by higher volumes, up 5% across the Group and categories, and better
price mix across all brands.
East Africa’s largest manufacturing company leveraged increased
investment and operational efficiencies across markets and segments to expand,
despite increases in alcoholic beverage taxes.
The net sales in EABL’s largest market, Kenya, grew by 8%,
with beer and spirits growing by 6% and 11%, respectively.
The market registered an outstanding performance in Senator
keg, with the iconic, low-priced beer growing by a fifth, with the new Kisumu
investment driving growth.
Mainstream spirits and Scotch whisky sales increased by 17%
and 23% respectively, with remarkable performance of Black & White.
The increase in excise duty drove bottled beer decline of
-1%, despite successful brand campaigns such as Tusker Na Nyama and Guinness
Football.
Uganda Breweries’ premiumisation agenda delivered better mix
and margins, helping lift net sales by 10%, driven by 15% growth in beer and 1%
in spirits, the latter was also impacted by the ban of the sachet format.
Marketing campaigns such as Bell All-Star Tour and Tusker
Lite Neon Experience helped drive bottled beer growth by 15%.
The launch of Black & White whisky helped lift Uganda’s
Scotch performance with net sales rising by 84% while the ready-to-drink
category grew by 18%.
Serengeti Breweries in Tanzania, the Group’s fastest-growing
business, expanded by 19%, lifted largely by a consistent performance in local
executions to drive the Serengeti trademark.
EABL leveraged several innovation initiatives during the
half-year, with new brands contributing 28% of the net sales.
Recently launched brands such as Hop House 13 Lager, Guinness
Smooth, Sikera Cider, Black &White whisky and Triple Ace vodka contributed
significantly to growth.
Commenting on the first half, EABL Group Managing Director
and CEO, Andrew Cowan, said: “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.”
He added: “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 recruit more
illicit alcohol consumption by offering safe, quality options.”
EABL will invest further during the financial year, to
consolidate gains so far made in its production, commercial and sustainability
capacities across the region.
Having made a total investment of Kshs.14 billion in the
Kisumu brewery in the previous years, the Group has invested a further Kshs.4.4
billion in production capacity improvements for existing and new brands.
As part of the recently announced Kshs.22 billion
sustainability investment to be spent across East Africa, EABL has embarked on
projects across East Africa to leverage renewable energy in biomass and solar
as well as water recovery and treatment.
These sustainability plans are geared towards reducing
carbon emissions by 42,000 tones, save over a billion cubic liters of water
annually and produce up to 10% EABL breweries’ power needs.
The Board of Directors has recommended an interim dividend
of Kshs.3 per share for the half-year period. This represents a 20% increase
from Kshs.2.50 compared to the same period last year.
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