TANZANIA – Tanzania Breweries Limited (TBL), the local subsidiary of the world’s largest brewing company AB InBev has said operating profit for the nine months ended December last year grew 16% while sales volume grew to 3.3 hectolitres resulting in 24% volume growth in revenue.
Revenues are driven by volume growth and product mix, also impacted by exceptional costs related to the combination from SABMiller to ABInBev.
The board has also approved a 120% increase in dividends payout to shareholders to US$0.34 per share for the year ended 2017.
A report by Daily News Tanzania indicated that the rise was compared to US$0.26 per share approved in the preceding year.
The dividend increase was despite internal and external challenges in its operations including imposition of 5% increase on alcohol excise duty and a ban of sachets, said the company.
Also, the company performance was influenced by disruptions in operations and process regarding transfer of ownership to AB InBev which merged with SABMiller in a more than US$100bn deal.
Synergies were harnessed from the ability to embrace the changes and transition in a challenging and uncertain business environment.
Such efforts included working on a strategy towards affordability and accessibility by investing in affordable brands and packs as well as investing in strengthening route to consumer capabilities.
“Our company’s performance in the last financial year proves that our strategy works.
We were able to reverse years of muted volume growth to deliver double digit growth despite challenges faced,” said TBL Group Managing Director Roberto Jarrin.
In the six month ended September, TBL said its net profit declined by 3% to US$39.02 million from US$40.36mn in 2016.
The year saw US$19.23mn in total investments with an increase in funds generated by the group compared to the prior year.
Focus on affordable brands
Improvement in volume and revenue performance was attributed to a shift towards affordable beer products despite tough trading conditions witnessed during the period.
Last year, the brewer announced changes in its operational model as a strategy to grow its market amid shifting sentiments.
The new model was geared at paying much attention on affordable brands so as to align itself to new economic realities.
“With the existing market conditions, the company had previously been growing at the rate of negative 0.3%.
We were therefore forced to re-think our operating model and realign it to the realities of the market,” said the Jarrin then.