Keeping Your Business in Mind

EABL Invests In Brands and Capacity for Long-Term Growth

In Summary

  • EABL is one of the largest Kenyan tax payers remitting over Kshs 60 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 region’s consumer economies
  • EABL Group Revenues grew 5% up
  • Innovation contributes 21%, Kshs 7.6 billion
  • Kshs 5 billion capital investment to expand capacity
  • Board of Directors proposed an interim dividend of Kshs 2.00 per share

East African Breweries Limited (EABL) has announced a Kshs 36.8 billion in revenues and Kshs 4.95 billion in profit for the half-year ended December 2017.

EABL’s volumes grew by 4% and revenues rose by 5% for the period but net earnings were impacted by consumer weakness in the Kenyan market relating to the protracted election process and excise-tax changes in Uganda. In addition, EABL increased investment in sales and advertising and accelerated capital investment to boost future capacity for Senator and spirits.

EABL Group MD Andrew Cowan said: “This is a solid set of results, delivered in a period of drawn out electioneering in Kenya which impacted consumption especially in the value segment. However, it is encouraging that bottled beer is in recovery and mainstream spirits continues to grow strongly. Our increased investment behind our brands in sales and advertising underlines our bold strategy to pursue existing and emerging growth in all segments of our business.”

Excluding Senator Keg, Kenya’s volume performance was up 8% driven by the resurgent performance of bottled beer and a double-digit growth in spirits. Senator keg was down 22% as its performance was impacted by a partial shut-down to expand capacity and higher consumer prices exacerbated by an extended period of elections impacting consumer activity and expenditure.

Uganda’s volume grew 15%, but the negative impact of excise on imports, down-trading and the contribution of spirits packaged in sachet formats reduced margins and resulted in overall flat net sales. The Serengeti brand family led the recovery in Tanzania, up 28% overall on the back of the successful launch of the Lite variant.

We have refreshed our focus around our marketing strategy, expanding our route to consumer to broaden the reach of our products across markets whilst innovating at scale. I am particularly impressed by our innovation agenda with our brands such as Tusker Cider, Serengeti Lite and Uganda Waragi Coconut which contributed 21% to our half-year net sales,” added Mr Cowan.

Profit for the year is at Kshs 4.95 billion, down 11% compared to the same period last year as a result of an 18% increase in investment into brands and sales, and higher interest charge on long-term borrowings.

Mr Cowan said the Kshs 5 billion investment in capacity expansion for spirits and Senator keg production over the period positions the company appropriately for the future, noting that construction of the new Kshs 15 billion brewery in Kisumu was going on as planned.

The Board of Directors has recommended an interim dividend of Kshs 2.00 per share for the half-year period, at the same level as last year.

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