East African Breweries Limited has issued a profit warning owing to what it terms as disruptions to its business across the region by the global coronavirus disease.
The brewer becomes the first listed firm to issue this cautionary statement with more firms expected to follow suit. The COVID-19 pandemic has triggered disruptions across all sectors of the economy, with horticulture, tourism, aviation, entertainment industries being among the worst hit.
Closure of bars and other entertainment spots and well as ban on social gathering and other leisure activities, has had a negative effect on demand for alcoholic beverages, products supplied by EABL.
“The COVID-19 global pandemic and the subsequent response measures taken across the region have impacted our business negatively,” said Dr Martin Oduor-Otieno, Chairman of the EABL Board of Directors in a statement.
The Board has informed shareholders and the general public that EABL’s current performance forecast indicates a decline in net earnings of approximately 25% for the financial year ended 30th June, 2020.
“The Company has deployed a raft of measures to minimize impact of the pandemic on its business,” said Oduor-Otieno.
Data from Euromonitor International shows that EABL is the most dominant player in Kenya’s alcohol drinks market, offering products that target different consumer segments in beer, spirits, cider, perry and ready to drink beverages (RTDs).
In the half year results for the six months ended 31st December, 2019, East African Breweries’ revenue rose by 10% to KSh 45.9 Billion, driven by higher volumes sold across its markets. Increased sales lifted its net earnings for this half year period to KSh 7.2 billion.