East African Breweries Limited (EABL) has announced a drop of 11.3% in net profit for the half year period ended 31st December, 2017.
The brewer says the results were impacted by weakness in the Kenyan market, excise-tax changes in Uganda, increased investment in sales and advertising as well as accelerated capital investment.
Profit after tax for the period was at Sh 4.95 Billion compared to Sh 5.59 Billion posted over the same period in December 2016.
EABL’s volumes grew by 4% and revenues for the period rose by 5% to Kshs 36.8 billion. Cost of sales also increased to Sh 20.8 Billion from Sh 18.6 Billion.
“Net earnings were impacted by consumer weakness in the Kenyan market relating to the protracted election process. In addition, EABL increased investment in sales and advertising and accelerated capital investment to boost future capacity for Senator and spirits.” the company said in a note.
According to EABL Group MD Andrew Cowan, last year’s prolonged electioneering period impacted consumption especially in the value segment.
The company also revealed that revenues from one of its most popular brand, Senator Keg, dipped 22% 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.
Kenya’s volume performance grew by 8% driven by the resurgent performance of bottled beer and a double-digit growth in spirits. 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.
Mr Cowan also added that over the period, the company had invested Kshs 5 billion (14% of headline revenue) in capacity expansion for spirits and Senator keg production.
The Board of Directors recommended an interim dividend of Kshs 2.00 per share for the half-year period, unchanged from last year. The dividend shall be paid, net of withholding tax, on or about 20th April, 2018.