EABL’s full year profit shrinks 20.8% as illicit liqour makes a comeback

EAST AFRICA – East African Breweries Plc (EABL) has revealed that the resurgence in illicit trade, as consumers move to cheaper unregulated products because of the economic conditions, has really hurt its performance in the Full year 2023.

The brewer’s profits shrunk by 20.8% percent for the year ended June to KES12.3 billion from Sh15.6 billion a year earlier despite posting a net sale of KES109 billion, stagnating to what it recorded the previous year.

“We have delivered these results in a period deeply impacted by high-cost inflation, multiple excise tax increases, and currency depreciation in Kenya,” EABL group chairman Dr Martin Otieno said.

The drop in profits is largely attributable to higher costs with a cocktail of increased indirect taxes, cost of sales, and net finance costs.

“The economic conditions have also led to a resurgence in illicit trade as consumers move to cheaper unregulated products,” EABL said in a statement.

Specifically, regional economic slowdown and inflationary pressure not only impacted consumers’ disposable incomes but also significantly increased the cost of doing business.”

However, East Africa’s alcoholic giant said the premium spirits segment proved resilient, registering double-digit growth.

During the trading period, EABL injected KES12.9 billion into capital venture activities including smart investment behind brands, digital and consumer experiences.

Uganda continued its encouraging half-year growth trajectory, closing at 17 percent growth aided by pricing benefits and modest volume growth.

Tanzania, on the other hand, registered a modest growth of one percentage point as the market continues to adjust to price increases taken earlier in the year.

EABL Group managing director Jane Karuku said the firm remained resilient despite the macroeconomic headwinds – including global inflation and geopolitical disruptions – which disproportionately raised costs and depressed consumer spending.

“Amidst these challenges, we maintained our strategic focus on delivering value to our consumers and all our stakeholders through execution excellence, and operational efficiency,” Karuku said.

EABL is expected to enjoy some tailwinds from the first pause on excise duty on alcoholic products within five years as further amendments to the rates of duty were omitted in this year’s Finance Bill.

Equally, additional changes carried out in the bill saw Parliament freeze the Kenya Revenue Authority (KRA) from implementing the previously annual adjustments to the rate of excise duty for inflation.

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