EABL post tax up by 5% - CNBC Africa

EABL post tax up by 5%

East Africa

by Elayne Wangalwa 0

East African Breweries Limited (EABL) recorded a 5 per cent rise in its net profit. PHOTO: Getty Images

EABL’s profit after tax was at 6.8 billion Kenyan shillings from 6.5 billion Kenyan shillings the previous year. The marginal increase was as a result of the growth in most of its products. The firm’s net sales growth was up by 4 per cent to 61.29 billion Kenyan shillings.

(READ MORE: Kenya's thirst for more whiskey)

The company which is East Africa’s largest alcohol beverage firm said that the results were also buoyed by strong performance in Uganda. The country delivered a 13 per cent increase in its Net Sales Value (NSV) as a result of strong performance on Waragi Gin and a strengthened management team.

However, the emerging beer category which includes Senator Keg which targets lower-income earners significantly declined after the implementation of excise tax in Kenya by over 75 per cent. Senator volumes collapsed in quarters 2, 3 and 4. In February, EABL announced that the duty imposed had slashed sales volume of the brand. The tax imposed on the keg hiked its price 67 per cent.

“Our regional performance has been mixed. Senator Keg isn’t really doing anything for anybody at the moment. The sales are very low, the distributors’ revenue is very low, they are struggling and it creates a lot of complications for us in our route market and our business overall,” EABL’s managing director, Charles Ireland said.

Kenya delivered a slight drop in its NSV of 1 per cent. Nonetheless, the country remained the group's biggest market contributing 64 per cent of the total sales. This was because of actions taken to strengthen tusker, guinness, baileys as well as overall packaged beer and overall spirits. Tusker retained its market leadership position and grew 17 per cent from 2013.

EABL which is controlled by Britain's Diageo Plc reported that the export markets grew 50 per cent supported by the opening of a depot in Juba, South Sudan’s capital and the introduction of cans. Despite the positive performance, political skirmishes in South Sudan and the flat growth in Tanzania slowed down the firm’s growth.

Tanzania performance was impacted by the short-term effect of the company's Route to Consumer changes.

The company has increased investment in their brands by 13 per cent.

“We are confident of the future and EABL’s ability to win market share, backed by the business strength and agility, proactive brands and capex investments and the long-term outlook for East Africa’s consumer economies,” said Ireland.