NAIROBI, Kenya, Jul 30 – East African Breweries Limited (EABL) has sounded a net profit warning to its shareholders for the full year ending June 30, 2013.
EABL projects a 25 percent drop in profits attributed to a 20 percent sale of Tanzania Breweries last year at a cost of Sh3.6 billion which was a one-off transaction.
The company said the proceeds were included in its results for the period ended June 2012 and will not be incorporated in this year’s results.
“EABL projects that net earnings for the year ending June 30 2013, will be more than 25 percent lower than reported for the previous year primarily due to two factors reported in the previous year’s results,” the statement from the firm on Tuesday indicated.
The brewer also said the lower profits will be due to a Sh19.5 billion loan taken in November 2011 to enable company to buy back a 20 percent shareholding in Kenya Breweries Limited from SABMiller Africa.
“The net finance cost which will be reported for the year ending June 30, 2013 is higher compared to the position reported for the year ending Jun 30, 2012,” EABL said.
The announcement comes after the group’s former Managing Director Devlin Hainsworth stepped down, barely eight months after he joined the brewer.
His position was taken by Charles Ireland, former Managing Director of Guinness, Anchor Berhad.
However the company expects to report growth in net sales for the year compared to the same period last year.
“EABL has a portfolio of iconic brands and is a resilient business, well-positioned to benefit from the forecast growth in the consumer economies of East Africa,” The firm said adding that it was optimistic that it will return to profitability in for 2014 fiscal year.
EABL’s half net profits ending December 2012 went down by 14 percent to Sh3.7 billion from Sh4.3 billion in the previous period.
Net financing costs went up by 221 percent from Sh642 million in 2011 to Sh2.06 billion.