East African Breweries Limited (EABL) has recorded a profitless growth in net income for the half year ended December 2022.
The alcohol maker, posted a net profit of Ksh.8.7 billion in the period under review, a negligible drop from the Ksh.8.73 billion posted in the same period in 2021.
During the period, Group volumes declined by 4 percent year-on-year, as price increases impacted consumer purchasing patterns, mainly in mainstream and value segments.
“EABL faced an exceptionally challenging time related to macro-economic volatility and drought situation across East Africa, global inflation, and geo-political disruptions related to the Russia/Ukraine war,” EABL Group MD Jane Karuku said.
“This was further compounded by excise related price increases in Kenya, effected in July and October, which significantly affected consumption of our brands.”
In July 2022, Kenya’s excise tax for beer and spirits came to effect following the 2022/23 Budget, increasing by 10 percent and 20 percent, respectively.
In October 2022, beer and spirits consumers were hit by a further 6.3 percent excise tax increase in the form of annual inflationary adjustment.
These increases came on the back of an annual upward excise adjustment in 2021, leading to a compounded annual excise tax increase of 23 percent for beer and 34 percent for spirits.
Consequently, beer volumes were down 13 percent in Kenya, with performance further undermined by a reemergence of illicit alcohol during the period under review.
As a result, EABL’s net sales growth regressed by 1 percent in Kenya, its largest market, while Uganda and Tanzania grew by 19 percent and 11 percent, respectively.
Despite the flat growth, the EABL Board recommended an interim dividend of Ksh.3.75 per share, similar to the same period last year.
“We will continue executing our strategy to navigate the prevailing macroeconomic volatility, leveraging our portfolio of extraordinary brands, smart investment, fuelled by our culture of everyday efficiency,” said Karuku.
“We are also staying close to our consumers, taking advantage of our commercial capabilities and digital tools to enable us rapidly understand trends and execute with precision.”
During the period, the business continued to invest smartly behind brands, digital capabilities and consumer experiences.
EABL invested Ksh.6.7 billion in capital expenditure to extend production capacity and Environmental, Social and Governance (ESG) initiatives.
The ESG investment has led to 99 percent renewable energy use in half of EABL’s six sites across East Africa, a significant progress on the company’s environmental agenda to accelerate its low-carbon journey.
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