KENYA – East African Breweries Limited (EABL), has reported a 9% increase in profit after tax to Kshs 7.2 billion (US$71.6m) for the half-year period ended 31 December 2019.
The company’s performance was boosted by increased investment and operational efficiencies across markets and segments, despite increases in alcoholic beverage taxes.
Net sales rose 10% to Kshs 45.9 billion (US$456m), driven by higher volumes which rose by 5% across the Group and categories, and better price mix across all brands.
Net sales in EABL’s largest market, Kenya, grew by 8%, with beer and spirits growing by 6% and 11%, respectively.
The market registered an outstanding performance in Senator keg, with the iconic, low-priced beer growing by a fifth and benefiting from the investment in the new Kisumu plant.
Mainstream spirits and Scotch whisky sales increased by 17% and 23% respectively, with remarkable performance of Black & White.
The increase in excise duty drove bottled beer decline of 1%, despite successful brand campaigns such as Tusker Na Nyama and Guinness Football.
Uganda Breweries’ premiumisation agenda delivered better mix and margins, helping lift net sales by 10%, driven by 15% growth in beer and 1% in spirits, the latter was also impacted by the ban of the sachet format.
Marketing campaigns such as Bell All-Star Tour and Tusker Lite Neon Experience helped drive bottled beer growth by 15%.
Launch of Black & White whisky helped lift Uganda’s Scotch performance with net sales rising by 84% while the ready-to-drink category grew by 18%.
Serengeti Breweries in Tanzania, the Group’s fastest growing business, expanded by 19%, lifted largely by a consistent performance in local executions to drive the Serengeti trademark.
EABL leveraged several innovation initiatives during the half year, with new brands contributing 28% of the net sales.
Recently launched brands such as Hop House 13 Lager, Guinness Smooth, Sikera Cider, Black&White whisky and Triple Ace vodka contributed significantly to growth.
The brewer spent Sh300 million (US$2.98m) to acquire an additional four percent stake in Serengeti Breweries Limited, raising its ownership in the Tanzanian subsidiary.
The deal was completed in July last year following the approval from Tanzania’s Fair Competition Commission. This increased its effective shareholding in Serengeti from 39.2 percent to 40.2 percent.
Commenting on the first half, EABL Group Managing Director and CEO, Andrew Cowan, said: “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 during the period.”
“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.”
EABL will invest further during the financial year, to consolidate gains so far made in its production, commercial and sustainability capacities across the region.
Having made a total investment of Kshs 14billion (US$139.3m) in the Kisumu brewery in the previous years, the Group has invested a further Kshs 4.4 billion (US$43m) in production capacity improvements for existing and new brands.
As part of the recently announced Kshs 22 billion (US$218.9m) sustainability investment to be spent across East Africa, EABL has embarked on projects across East Africa to leverage renewable energy in biomass and solar as well as water recovery and treatment.
These sustainability plans are geared towards reducing carbon emissions by 42,000 tonnes, save over a billion cubic litres of water annually and produce up to 10% EABL breweries’ power needs.
To commend EABL’s Sustainable initiatives, the brewer bagged a golden award at the Africa Foodex awards held last year December by FWAfrica for its condensate recovery on packaging line.
In addition to that the company also walked away with the prestigious accolades for alcoholic beverages of the year and Business investment of the year.