Tanzania Breweries full year profit plummet by 41% impacted by decline in revenue, heightened expenses

TANZANIA – Tanzania Breweries Limited (TBL), a subsidiary of AB InBev has announced that its full-year profit for the year ended December dropped by 41%, impacted by the COVID-19 pandemic.

The brewer’s net profit declined to Tsh. 89.08 billion (US$38.4m) from Tsh. 150.21 billion (US$64.7m) attained in the corresponding period in 2019.

According to the maker of Castle Lager, its revenue slightly dropped by 6.2% to Tsh. 961.88 billion (US$414.7m) from Tsh. 1.025 trillion (US$442m).

The decline is attributed to slowed down business as on-trade outlets registered reduced foothold due to the pandemic.

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Coupled with heightened operational costs and expenses that slashed almost two-thirds of its earnings, lead to dwindled profits.

TBL Group managing director Mr Philip Redman said that beer revenue and volumes were mostly affected during April and May last year, whilst spirits achieved single-digit growth in the period, reports Daily News Tanzania.

“Operational overhead and sales and distribution costs increased during the year mostly due to central costs and exceptional items,” he said.

Operating margin ended up at 17.0 per cent compared to previous year which was 21.5 percent. However, during the year, the company recorded achievements in total assets and total equity and liabilities which have both increased by slightly one per cent.

The group generated Tsh. 253.45 billion (US$109.2m) from its operations, Tsh82.19 billion (US$35.4m) of which was used to pay corporate income tax, and Tsh. 39.71 billion (US$17.12m) to pay capital expenditure.

“With covid-19 easing in the country, signs of recovery have been observed in the second half of the year.”

TBL Group Managing Director – Mr Philip Redman

While Tsh. 7.38 billion (US$3.18m) was used in financing activities and the remaining funds were retained for future activities.

Despite the dwindled in performance, TBL boss remains positive indicating that, “With covid-19 easing in the country, signs of recovery have been observed in the second half of the year,” Mr Redman said.

In the half year period ended 30th June 2020, the leading beer manufacturer announced a 9% decline in revenue to Tsh. 429.03 billion (US$185m).

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Its operating profit decreased from Tsh. 114.334bn (US$49.3m) of the same period in the previous year to Tsh. 73.31bn (US$31.61m) reflecting a 36% decline contributed mostly by a decrease of beer revenues impacted by COVID-19.

Operational Overhead and Sales and Distribution(S&D) costs reduced in the first six months of 2020 while other central costs, exceptional items and recharges remained stable or increased. Operating margin ended up at 17.1% compared to prior year which ended at 24%.

The group’s generated cash from operations was TShs 73.258 billion (US$31.59m), of which TShs 42.986 billion (US$18.5m) was utilized to pay corporate income tax, TShs 10.885 billion (US$4.69m) to pay capital expenditure, TShs 5.352 billion (US$2.3m) used in financing activities and the remaining funds was retained for future activities.

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