East African Breweries first half profit jumps to Ksh.10.6billion
Published on: January 31, 2020 02:18 (EAT)
East African Breweries has posted a 9% jump in pretax profit to Ksh. 10.6 billion for its first half to the end of December, the company said on Friday. The company, which is majority-owned by Britain’s Diageo , attributed the growth to a 10% increase in net sales to Ksh. 45.9billion. “We are pleased by this performance. Although excise duty escalation on alcoholic beverages in Kenya’s last budget impacted bottled beer, a more stable operating environment provided an opportunity to continue our growth momentum,” said Martin Oduor Otieno, the EABL Group Chairman. EABL said it leveraged several innovation initiatives, with new brands contributing 28% of the net sales. A statement released on Friday further averred that recently launched brands such as Hop House 13 Lager, Guinness Smooth, Sikera Cider, Black & White whisky and Triple Ace vodka contributed significantly to growth. Net sales in Kenya–the company’s largest market— grew by 8%, with beer and spirits growing by 6% & 11% respectively. Kenya reportedly had an outstanding performance in Senator Keg, with the iconic, low-priced beer growing by a fifth, with the new Kisumu investment driving the growth. “Mainstream spirits and Scotch whisky sales increased by 17% & 23% respectively, with remarkable performance of Black & White,” the statement reads. The company further noted that increase in excise duty drove bottled beer decline of -1%, despite successful brand campaigns such as Tusker Na Nyama & Guinness Football. “We are continually investing in our farmers all the way from research, to getting them the right varieties of seeds to withstand environmental/weather challenges to ensure that we are growing value across our entire value chain” said Jane Karuku, the MD for Kenya Breweries Limited. Uganda Breweries’ premiumisation agenda is said to have delivered better mix and margins. “Marketing campaigns in Uganda Breweries such as Bell All-Star Tour & Tusker Lite Neon Experience helped drive bottled beer growth by 15%,” said EABL MD & CEO Andrew Cowan. Serengeti Breweries in Tanzania, the Group’s fastest growing business, also expanded by 19%, lifted largely by a consistent performance in local executions to drive the Serengeti trademark. “We remain cautiously optimistic about our second half of the year, although unpredicted tax and regulatory changes and challenges in our operating environment continue to present potential risks in the horizon,” he added. The company said net sales were driven by higher volumes, up 5% across the Group & categories, and better price mix across all brands. “As EABL Group, we leveraged increased investment and operational efficiencies across markets and segments to expand, despite increases in alcoholic beverage taxes,” said Cowan.