EABL profit climbs to Sh12.3b

August 29, 2008

, NAIROBI, August 29 – East African Breweries Limited has announced a 16 percent growth in its pre-tax profit, for the year ended June 30.

Group Managing Director, Gerald Mahinda told an investor briefing on Friday that pre tax profit rose from Sh10.6 billion to Sh12.3 billion while turnover rose to Sh32.5 billion from the Sh25.9billion recorded in 2007.

East African Breweries Limited  (EABL) now ranks as the second most profitable firm for companies that publish their financial results, after being overtaken by Safaricom in 2007.

Mahinda attributed the performance to aggressive investments in brands and staff and added that they were able to achieve the results despite the increased fuel prices and inflation.

“Despite the minor setbacks that we experienced early this year, all our businesses have performed well and we have been able to sustain our market share,” he boasted.

Beer and spirits volumes increased by 16 percent to 770,000 Hectolitres.

“Our marketing spend also went up by 46 percent to Sh680 million,” the MD added.

The board recommended a final dividend payout of Sh5.65 per share.

On the Alvaro brand that has lately generated a lot of controversy due to claims that it is alcoholic, the MD said they were still in the testing stage and had actually sold over eight million bottles in under four months.

“The controversial debate has not had any effect on Alvaro sales,” he added.

He revealed that they were soon to launch a manufacturing plant for the drink and would go into full capacity in a month’s time.

He said they have invested Sh3 billion on new assets and plans to invest Sh5 billion in 2009.

Mahinda also downplayed the entry of other players in the brewing industry saying the market is big enough for them.

Keroche Industries last week announced that it had invested massively in a beer brewing plant.

He pointed out that only about 30 percent of the East African market was served, which presented a huge opportunity for new entrants to compete effectively.

The average beer consumption in Kenya is 12 litres per person per year compared to South Africa’s 59 litres and Angola’s 36 litres.

“The market is big enough. If the economy keeps at the current pace, I think the issue is who is more equipped to acquire the growing (market) share, so that is not really our concern,” he added.

He disclosed that they were looking at penetrating into new markets in East Africa such as Burundi and Rwanda.

The brewer has already started selling beer to Rwanda since July.

Mahinda also said they had not abandoned plans to enter the Ethiopian market adding that negotiations were still on going.

He added that they were still mulling over whether to invest in a new plant or buy out an existing one.

“We still are interested in that market given that at about 60 million people, it is the second most populous market in Africa. You cannot be operating in East Africa and not be in that market,” he added.

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