NAIROBI, Kenya, Jan 31 – East African Breweries has posted Sh7.2 billion in profit tax for the half-year ending December 31, 2019.
Net sales jumped 10 percent to Sh45.9 billion, driven by higher volumes, up 5 percent across the Group and categories, and better price mix across all brands.
East Africa’s largest manufacturing company leveraged increased investment and operational efficiencies across markets and segments to expand, despite increases in alcoholic beverage taxes.
In Kenya, which is the group’s largest market, net sales grew by 8 percent, with beer and spirits growing by 6 percent and 11 percent, respectively.
Senator Keg continued its outstanding performance growth by a fifth, with the new Kisumu investment driving growth.
Mainstream spirits and Scotch whisky sales increased by 17 percent and 23 respectively, with percent remarkable performance of Black & White.
The increase in excise duty drove bottled beer decline of –1 percent, despite successful brand campaigns such as Tusker Na Nyama and Guinness Football.
Uganda Breweries’ premiumization agenda delivered better mix and margins, helping lift net sales by 10 percent, driven by 15 percent growth in beer and 1 percent in spirits, the latter was also impacted by the ban of the sachet format.
Marketing campaigns such as Bell All-Star Tour and Tusker Lite Neon Experience helped drive bottled beer growth by 15 percent.
Launch of Black & White whisky helped lift Uganda’s Scotch performance with net sales rising by 84 percent while the ready-to-drink category grew by 18 percent.
Serengeti Breweries in Tanzania, the Group’s fastest-growing business, expanded by 19 percent, lifted largely by a consistent performance in local executions to drive the Serengeti trademark.
EABL leveraged several innovation initiatives during the half-year, with new brands contributing 28 percent of the net sales.
Recently launched brands such as Hop House 13 Lager, Guinness Smooth, Sikera Cider, Black &White whisky and Triple Ace vodka contributed significantly to growth.
“We are pleased by this performance. Although excise duty escalation on alcoholic beverages in Kenya’s last budget impacted bottled beer, a more stable operating environment provided an opportunity to continue our growth momentum during the period. We remain cautiously optimistic about our second half of the year, although unpredicted tax and regulatory changes and challenges in our operating environment continue to present potential risks in the horizon,” EABL Group Managing Director and CEO, Andrew Cowan.
EABL will invest further during the financial year, to consolidate gains so far made in its production, commercial and sustainability capacities across the region.
Having made a total investment of Sh14 billion in the Kisumu brewery in the previous years, the Group has invested a further Sh4.4 billion in production capacity improvements for existing and new brands.
As part of the recently announced Sh22 billion sustainability investment to be spent across East Africa, EABL has embarked on projects across East Africa to leverage renewable energy in biomass and solar as well as water recovery and treatment.
These sustainability plans are geared towards reducing carbon emissions by 42,000 tonnes, save over a billion cubic litres of water annually and produce up to 10 percent EABL breweries’ power needs.
The Board of Directors has recommended an interim dividend of Sh3 per share for the half-year period. This represents a 20 percent increase from Sh2.50 compared to the same period last year.