Listed brewer East African Breweries (EABL) recorded a KSh 8.1 billion profit after tax in the first half of 2024, a 20% increase from KSh 6.8 billion in the same period in 2023.
- •The brewer attributed the increase to reduced interest costs coupled with foreign currency gains owing to a stronger currency amid improved macroeconomic conditions in the region.
- •The company’s sales increased by 2% to KSh 67.9 billion alongside 1% volume growth driven by innovative product launches, strategic pricing, and improving product mix.
- •EABL has recommended an interim dividend of KSh 2.50 per share to be paid on or about 30th April 2025 to shareholders in the register by 21st February 2025.
“Despite these positive shifts, challenges to our business prevailed including shrinking disposable income, high cost of material inputs whilst currency volatility remains a concern,” EABL said in the earnings report.
The cost of sales went up 7.4% to KSh 39.8 billion in the 6 months, watering down the mild increase in sales. Finance costs were 13% lower to KSh 3.4 billion helped by a KSh 4.9 billion debt reduction in the period.
Operating expenses were up 4.9% to KSh 13.7 billion with foreign exchange gains at KSh 1.1 billion in December 2024 from KSh 2.3 billion in FX losses in December 2023.
The company noted consumer behavior shifting as low disposable income has reduced alcohol’s share of wallet by 0.2%, while value hunting continues to rise. However, demand was skewed towards unique offerings owing to consumer’s desire to explore.
Further, the low disposable incomes and higher costs led consumers towards illicit trade resulting in constrained purchasing power , reprioritization and downtrading. “Illicit trade continues to grow, necessitating extra efforts from the government to mitigate the impact of unregulated alcohol trade,” EABL added.
The company’s cash and cash equivalents of KShh 14.1 billion increased by KSh 3.4 billion driven by revenue growth and improved working capital management.
In terms of organic growth, the Tanzanian unit led with 16%, Kenya at 9% and Uganda 3%. This comes after Diageo, EABL’s parent company agreed to sell its Ghana business in a transaction valued at US$81 million.
