Tanzania Breweries half year profit falls 16% on difficult business environment

TANZANIA – Tanzania Breweries Ltd, the country’s largest brewing company has reported 16% decline in profit to US$28.25 million for the six months ended June 2018 due to challenging business environment, reports Daily News Tanzania.

Revenue dropped by 3% to US$213.53 million impacted by heavy rains in the months of April and May.

TBL’s first quarter performance was affected by the ban of spirits sachet imposed in the second quarter last year.

The company has been shifting its strategy towards more affordable brands and packs to woo and persuade more consumers switch from the informal sector.

This was marked by moving towards affordability and accessibility by investing in affordable brands and packs as well as investing in strengthening route to consumer capabilities.

Speaking on the results, the Group Managing Director, Roberto Jarrin said: “Our company’s performance in the last financial year proves that our strategy works.

We were able to reverse years of muted volume growth to deliver double digit growth despite challenges faced.”

Normalised operating profit declined by 25% to US$279.97 million compared to US$374.03 million in the corresponding period, due to 1.5% cost of sales-rise to on account of higher raw materials.

Selling and distribution costs increased to 61.04bn/- in the period under review compared to 60.17bn/- of the corresponding period last year as a result of marketing initiatives related to the FIFA World Cup.

During the period, the government introduced a 5% increase on alcohol excise duty spread over a three-year period from 2018 to 2020 to help raise the government’s fiscal revenues.

Externally, the company faced disruptions in operations and processes during the transition to ABInBev in the quest to exercise synergies and on board shared practices.

For the nine months ended December last year, TBL’s operating profit grew 16% while sales volume grew to 3.3 hectolitres resulting in 24% volume growth in revenue.

According to the company, revenues were driven by volume growth and product mix, also impacted by exceptional costs related to the combination from SABMiller to ABInBev.

The board approved a 120% increase in dividends payout to shareholders to US$0.34 per share for the year ended 2017.

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