Zambian Breweries expects reduction in sales volume, revenue in half year period

ZAMBIA – Zambian Breweries Plc, subsidiary of AB InBev has announced that it expects its basic earnings per share for the half year period ending 30th June 2020, to be 108% lower than that of the corresponding period last year.

This reduction is attributed to the decline of its sales volume and revenues, ending the period under review with a modest 4% volume growth, with a significant short fall of 10% against its budget.

“We experienced a dramatic reduction of trading activity in the 2nd quarter of the year with a double-digit decline against the prior year,” stated the company.

In addition to the limitation on trading activity, which led to a notable negative impact on business volume performance and revenue generation relative to budgeted activity, the material depreciation of the Kwacha currency against major world trading currencies further resulted in price escalation of dollar denominated raw materials for the business.

The brewer posted a 17% increase in revenue of K2.092 billion (US$114.8m) from K1.787 billion (US$98m) recorded in the previous year 2018 in its full year period ended December.

The company earned a record-breaking profit of K274.4 million (US$15m) a 27% rise from K216.6 million (US$11.8m) registered in 2018.

Despite the absence of carbonated soft drink in its production, the clear beer volumes reached record levels, with the brewer selling 2.3 million hectolitres, up 9% compared with 2018.

In 2018, Zambian Breweries finalised the sale of its Coca-Cola bottling business to Coca-Cola Beverages Africa (CCBA), setting it on course to focus on its clear beer business.

The growth in volume sales was driven primarily by superb performance of Eagle, Mosi Premium, Castle Lite and Carling Black Label lagers, as well as impressive growth in sales of imported Budweiser and Stella Artois.

However, clear beer variable production costs and distribution costs were up by 8% and 24% respectively.

This was due to the cost of greater volume, higher cost of foreign currency-dominated imported raw materials following the Kwacha devaluation and increased inter-depot transfers to balance volume demand.

This resulted in a clear beer gross margin above the 40% mark, representing an improvement of 25% against prior year results.

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