East African Breweries Limited(EABL) posted a 21% decline in its net profit for the full year ended 30th June 2023 to KSh 12.32 billion.
The listed brewer also cut is dividend payout cheque size to final dividend of KSh 5.5 per share from KSh 11.00 per share paid out the prior financial year.
EABL reported a 10.1% jump in cost of sales to KSh 62.2 billion. The brewer reported KSh 110 billion in net sales for the full year ended June 30, 2023, a similar revenue performance compared to prior year.
EABL financials and key drivers
In its statement, EABL cites high cost of raw materials, steep excise duty hikes and a weakening Kenya Shilling for its sluggish financial performance. These costs, the firm said, could not be fully offset by increased prices and cost management initiatives.
EABL’s Group volumes were down seven percent year-on-year, as sales were impacted by a cut in consumer spend as they reacted to price increases at the watering joints.
EABL posted significant improvements in its Uganda subsidiary which grew 17% boosted by increased volumes and price benefits. This is compared to the Tanzanian business, which managed a 1% growth due to price increases which hit sales figures.
EABL Group managing director Jane Karuku said the firm remained resilient despite the macroeconomic headwinds – including global inflation and geopolitical disruptions – which disproportionately raised costs and depressed consumer spending
” Amidst all challenges, we maintained our strategic focus on delivering value to our consumers and all our stakeholders through execution excellence, and operational efficiency,” said EABL Group Managing Director Jane Karuku.
Even so, she says the company remains optimistic about the growth prospects for THE business.
“We continue to invest in our advantaged portfolio of brands and insight-led innovations to meet the ever-evolving needs of our consumers,” Karuku said.
EABL considers Tanzania as its fastest growing market delivering continuous double digit growth, largely supported by Serengeti brands beer consumption.
Uganda market is dominated by mainstream spirits and value beers, which are driving its growth. The Kenyan market performance remains subdued due to shocks occasioned by multiple excise duty hikes.
In July 2022, Kenya’s excise tax for beer and spirits came to effect following the 2022/23 Budget, increasing by 10 percent and 20 percent, respectively. In October 2022, beer and spirits consumers were hit by a further 6.3 percent excise tax increase in the form of annual inflationary adjustment. These increases came on the back of an annual upward excise adjustment in 2021, leading to a compounded annual excise tax increase of 23% for beer and 34% for spirits.
EABL PLC East African Breweries PLC (EABL) is a regional leader in beverage alcohol with an exceptional collection of brands across beer and spirits.
Although its business is concentrated on three core markets of Kenya, Uganda and Tanzania, its products are sold in more than 10 countries across Africa and beyond.
“The Kenyan consumer’s income has become more depressed leading to a rise in consumption of illicit alcohol, which now constitutes over 50% of the market. The government needs to get tougher to protect the consumers.” Group CEO Jane Karuku
EABL household brands include a combination of local jewels and international premium spirits such as Tusker, Guinness, Bell Lager, Serengeti Lager, Kenya Cane, Chrome Vodka, Johnnie Walker, Captain Morgan and Smirnoff.
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