COVID-19 pandemic takes big bite on Namibia Breweries earnings reporting 18% decline in half-year revenue

NAMIBIANamibia Breweries Limited’s (NBL), subsidiary of the Ohlthaver & List (O&L) Group has reported a 18% decline in half year revenue for the period ended December 2020, settling at N$1.3 billion (US$87.3m).

The leading brewer attributes the decline to COVID- 19 related restrictions as well as alcohol bans in South Africa (SA), which adversely impacted the trading environment.

According to the company its overall volumes went down by 23.1% despite Namibian beer volumes increasing by 1.5% on the back of strong consumer support and loyalty, with specifically Windhoek Draught showing exceptional growth.

“This is mainly attributed to our continued drive for responsible and excellent trade execution, high quality standards, flexible and innovative route to market, cost and production efficiencies as well as innovative operational execution,” NBL Managing Director (MD), Marco Wenk said.

However, these gains were offset by 66.1% drop in beer volumes supplied to South Africa due to lockdown conditions and alcohol bans.

The company notes that overall export volumes contracted by 15% with Tanzania and Zambia still performing well, also given a favourable exchange rate during the reporting period.

Beer contributed the most to the company’s revenue in Namibia at 77% while ciders accounted for only 0.4% sales and soft drinks dipped slightly from a sales contribution of 4.9% in 2019 to 4.6%.

“Given our strong and diverse brand portfolio, strong route to market, as well as world class execution, NBL is well positioned to defend and grow its market share while capitalizing on any future growth opportunities.”

NBL Managing Director (MD) – Marco Wenk

Its operating profit, which measures the profit a company generates from its core business function, took a slight skip up at N$344 million (US$23.1m), 1.3% above the N$339 million (US$22.7m) recorded in 2019.

Investment in associates, mainly the Heineken South Africa investment, was in bad shape during the period reporting a loss, and bringing the investment value to N$689 million (US$46.2m) from almost N$1 billion (US$67.15m) in 2019.

The loss led to NBL’s share of an associated loss of N$90 million (US$6m) – a complete reversal from 2019’s positive contribution of N$77 million (US$5.17m).

With the mixed bag of performance both in home and other markets, the century old company registered N171 million (US$11.4m) profit after tax, down by 46%.

Despite the challenging period, the group marked a significant milestone of reaching its 100-year Centenary during October 2020.

Staying true to its nature of driving innovation in the alcohol industry, NBL launched Horizon, as a new offering in the non-alcoholic segment with three variants i.e., lemon, apple and berries.

The brewer also revealed that an agreement was concluded between the company and a distributor in Texas, USA, to stock up and sell its beer in the international market.

NBL has made its mark in the challenging global beer market, with Europe and other African countries stocking up on litres of beer.

The most recent country to import Namibian beer is Australia, where the NBL says its footprint is gaining momentum.

“Given our strong and diverse brand portfolio, strong route to market, as well as world class execution, NBL is well positioned to defend and grow its market share while capitalising on any future growth opportunities,” stated Wenk.

On its future outlook, NBL will continue to focus on further innovation around brands, trade execution and operational efficiencies while continue to support and adhere to all regulations and directives to reduce the spread of the COVID-19 virus.

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