East African Breweries Limited (EABL) #ticker:EABL has posted a 47.4 per cent net profit decline in six months to December on the back of reduced sales and a higher tax provision.
The brewer’s net earnings retreated to Sh3.79 billion from Sh7.21 billion booked in a similar half-year in 2019, prompting the management to withdraw interim dividend for the first time in order to conserve cash.
EABL says the performance in the review period, though a drop from a similar period last year, is a significant improvement compared to the Sh0.2 billion net loss recorded in the previous half-year to June 2020.
Investors will miss out on Sh2.37 billion they received last year when the brewer announced an interim dividend payout of Sh3 per share.
EABL group chief executive Jane Karuku said Covid-19 had interrupted the brewer’s growth trajectory, but recovery has set in with July to December sales rising by 53 per cent when compared to January-June performance.
“We remain cautiously optimistic about the second half of the year, not least because the pandemic and potential shifts in our trading environment present risks on the horizon,” said Ms Karuku.
“We will continue to stay close to our consumers, innovate to address the consumer patterns, tightly manage our costs, and with agility reallocate resources to address the dynamic operating environment.”
During the review period, net sales dropped by three per cent to Sh44.5 billion while the cost of sales rose five per cent to Sh25.1 billion to put pressure on the bottom-line.
Net sales in Kenya, which contributes 66 per cent of the total group sales, dropped by 10 per cent but those of Uganda and Tanzania rose by 13 per cent and 17 per cent respectively.
EABL said the decline in sales in Kenya was due to Covid-19 containment measures that saw continued closure of bars as well as a ban on the sale of alcohol in restaurants in the first quarter.
Although the bars and restaurants were re-opened in the second quarter, operations were impacted by the protocols implemented for safety of consumers as well as the restrictions of opening hours and the curfew, said EABL.
Senator Keg bore the brunt of the Covid-19 disruption with sales in Kenya dropping by 29 per cent due to the State decision to limit alcohol consumption to take-away.
Bottled beer sales also dropped by 14 per cent as mainstream and premium spirits rose by 13 per cent.