Rwanda’s Bralirwa profits drop by 83.5% on account of rising expenses

RWANDA – Bralirwa Limited, the largest brewer and soft beverage company in Rwanda has reported a 83.5% drop in profits from Rwf7.2 billion (US$7.5m) earned in 2018 to Rwf1.2bn (US$1.25m) gained in 2019, according to company’s financials indicate.

However, the sales volume went up by 5.4 per cent to 1,886 000 hectoliters from 1,790,000 hectoliters in 2018, so did the revenue by 1.8 per cent to Rwf100.6bn (US$104.9m).

The decrease in profits is attributed to a rise in expenses. The company’s financials indicate that selling and distribution expenses rose by 74.5 per cent to Rwf 7.8bn (US$8.1m) while ‘other operating expenses’ grew by 1360.1 per cent from Rwf301m (US$0.3m) to Rwf4.4bn (US$4.58m).

Administrative expenses at the brewery rose by 26 per cent to Rwf 12.4bn (US$12.9m).

Merid Demissie, the Managing Director of Bralirwa noted that while topline results such as sales had improved compared to the previous year, financial results had been affected by a number of one-offs including prior-year tax adjustments, impairment on the loan to Bramin and a number of provisions.

Bramin mechanised and Irrigated Maize farm is a joint venture between Bralirwa and Minimex.

He noted that in 2019, the company also made investments in its people, brands, capacity, sustainability and digital solutions to maintain sustainability.

The firm will be seeking approval from shareholders during the next Annual General Meeting to withhold payments of dividends owing to what they termed as uncertainties on the extent and duration of disruption due to COVID-19.

Debt wise, the firm’s USD denominated long-term IFC loan is now Rwf14.6 bn (US$15.2m), with total debts by Bralirwa standing at Rwf41.3 bn (US$43m) from Rwf 47.7bn (US$49.7m) in 2018.

The brewer is yet to make any returns from Bramin JV farm which is currently in its 6th year of commercial farming as it was found to be requiring further improvement in operational results, efficiencies, cost savings and crop rotation in order to become profitable.

While continued investment somewhat dented the brewer’s financials, the company said that they expect a turnaround of the farm to become profitable in the near future.

Going forward, the firm cited uncertainties resulting volatility in the global economy are expected to continue to impact African economies in the coming year.

“Our initial plan for 2020 was further top line, profit and margin growth in the context of continued outperformance of the Rwandan economy relative to the broader African region driven by new product introductions, cost management and further debt reduction,” the company said in a statement.

The Heineken Group owns 75 percent of the shares of the company. The remaining 25 percent are owned by individual and institutional investors.

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