Andrew Cowan
Britain
Cowan
Diageo
Disqus
EABL
East African Breweries
Kenya
Kisumu
Nairobi
NSE
Ruaraka
Seaboard
Sh7.5
Tanzania
UNGA
US

EABL profit drops 15pc to Sh7.25bn on higher costs

The NSE-listed brewer, which is controlled by Britain’s Diageo, made a net profit of Sh7.25 billion in the period compared with Sh8.51 billion a year earlier. Its revenue rose 4.57 per cent to Sh73.45 billion driven by its bottled beer business in Kenya and Tanzania and the spirits segment.The company’s total costs in the period jumped 15.93 per cent to Sh20.66 billion on the back of expansion of its plants and increased promotional activities, said the brewer.

East African Breweries (EABL) #ticker:EABL has reported a 14.79 per cent drop in net profit in the year ended June weighed down by higher costs and tax expenses. The NSE-listed brewer, which is controlled by Britain’s Diageo, made a net profit of Sh7.25 billion in the period compared with Sh8.51 billion a year earlier.Its revenue rose 4.57 per cent to Sh73.45 billion driven by its bottled beer business in Kenya and Tanzania and the spirits segment.The company’s total costs in the period jumped 15.93 per cent to Sh20.66 billion on the back of expansion of its plants and increased promotional activities, said the brewer.

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“Profit after tax declined by 15 per cent as a result of an one-off tax provision but strong underlying performance with robust cash flow delivery secured the necessary funding for the higher investment in the period,” said the brewer in a statement.“It’s a one off provision for tax exposure,” said Mr Geiszl.The EABL declared a final dividend of Sh5.5 per share, unchanged from 2017 raising the total payout for the year to Sh7.5 per share same as last year. EABL managing director Andrew Cowan, said its lower-end keg beer suffered a 13 per cent decline in sales in the period on the back of political uncertainty in Kenya in the first half of 2018 and temporary closure for upgrade of its Nairobi based Ruaraka plant. The brewer installed new rackers — equipment used to fill kegs or containers with beers — in a Sh800 million upgrade of the plant.Mr Cowan said EABL’s spirits net sales increased 8 per cent in the full year, driven by a strong performance of its mainstream spirits portfolio (up 23 per cent) while beer sales increased 4 per cent, fueled by growth of bottled beer.“We see a strong comeback for the Senator keg,” said Mr Cowan.The company said its new plant in the western Kenya city of Kisumu is complete and is set for commissioning “later this year” setting the stage for creation “of over 100,000 direct and indirect jobs.”“In the year, we have spent Sh13 billion in capital expenditure with Sh7.8 billion of that being spent on the Kisumu brewery,” Mr Cowan said.“EABL has already contracted over 15,000 farmers to supply the new brewery with sorghum for production of the low-priced Senator brand, enabling EABL to leverage opportunities to recruit consumers from the illicit alcohol market,” added the brewer in a statement.

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