, NAIROBI, Kenya, Jan 28 – East African Breweries Limited (EABL) has posted 67 percent growth in net profit for the six months period that ended December 31, 2015 to Sh7.7 billion compared to Sh4.6 billion reported in the previous year.
The profits are attributable to the disposal of one of its subsidiaries – Central Glass Industries Limited (CGIL) – to South Africa’s Consol Glass Proprietary valued at Sh4.5 billion.
The sale also included a Framework Supply Agreement which will ensure continuity of supply of glass bottles to EABL and its group for a term of five years and in which Consol Glass Proprietary agreed to pay EABL a success fee of Sh420 million.
READ: EABL sale of glass subsidiary valued at Sh4.5bn
Excluding the sale, the firm’s net profit stood at Sh5.5 billion which represents a 16 percent increase from the previous year. The management attributes the growth to double digit growth in five out of eight product segments and recovery in Senator Keg, after duty remission review in Kenya.
Senator Keg and spirits performance drove Kenya’s growth that delivered 22 percent of net sales with innovations led by chrome Vodka, Kenya Cane Coconut and Allsopps Stout contributing to the growth.
However, net sales in Uganda and Tanzania remained flat in local currency terms. Volatile environment in South Sudan negatively affected the firm whose export markets declined.
South Sudanese pound devaluation made the firm lose Sh1 billion. CGIL sale improved the firm’s operating cash flow contributing to a 38 percent decrease in net finance costs in the period, while total net borrowings decreased by Sh8.5 billion.
Selling, distribution and administrative expenses increased by 10 percent compared to the previous year due to investments in their brands, route to consumer and people.
The board of directors has recommended an interim dividend of Sh2 per share up from Sh1.50 last year.