EABL announces 40pc growth in net profit

In Summary

• The firm’s Group Managing Director Charles Ireland said the growth presents a brighter future for the beer maker after the recent tax revision on its low-end market beer, senator keg.
• East African Breweries recorded a six per cent rise in net sales to bring in Sh64.4 billion led by high sales of spirits across the region.

By EDWIN OKOTH
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East African Breweries has announced a 40 per cent jump in profits for the year ending June 2015 to Sh9.6 billion.

The company has attributed the earnings surge to increased sales of its spirits, premium beer and ready to drink products as well as an overall growth from its three subsidiaries.

The firm’s Group Managing Director Charles Ireland said the growth presents a brighter future for the beer maker after the recent tax revision on its low-end market beer, senator keg.

“We are pleased with this performance and certainly our shareholders will equally be pleased given the overall economic conditions in the market. Our efforts to add value to our shareholders and clients however will be stepped up as we engage strategies to respond to the existing challenges including the depreciations in the East African currencies against the US dollar,” Mr Ireland said.

DIVIDEND

East African Breweries recorded a six per cent rise in net sales to bring in Sh64.4 billion led by high sales of spirits across the region.

Kenya remains the anchor market for the regional beer maker contributing 61 per cent followed by Uganda (18 per cent) and Tanzania (11 per cent) as the other 10 per cent is shared by the other markets.

Shareholders will now receive a Sh6 dividend pay-out per share after the board made the 50 per cent increase in earnings per share compared to last year.

Board chairman Charles Muchene said the brewer will come out even stronger from the previous challenges.

“We had some challenges but we remained strong through them. Changes in taxes, business disruptions from the fight against illicit drinks, the local currency fluctuations, the election coming up in Tanzania and situation in Burundi all presented challenges. The performance shows that this business is in good hands and we will continue to grow,” Mr Muchene said.

Last year, East African Breweries posted an after-tax profit of Sh6.85 billion. The firm’s low-end market beer — Senator Keg — had been hit by a tax that saw its price increase, reducing consumption.

Senator Keg had a 75 per cent drop in sales but has since grown more than six times in sales after the tax was revised from July 1.

East African Breweries also took a big hit from the volatile exchange rate, losing Sh900 million in foreign exchange this year. The firm is now planning on a hedging strategy to cushion its margins.

Going forward, the company will increase volumes and productivity, strengthen its focus on the spirits segment after recording a 31 per cent regional growth in the last one year and source its raw materials locally.

EXPAND DISTRIBUTION

Kenya Breweries Limited Managing Director Jane Karuku said the brewer had finalised plans to expand its distribution outlets across the country.

“We have over 1,000 new outlet licenses across the country and we expect to continue with more expansion for our distribution going forward,” Ms Karuku said.