East African Breweries (EABL) has reported a 38 per cent growth in net earnings for the first six months of the year, underpinned by disciplined cost control, innovative products, margin expansion, and reduced financing costs.
According to financial results for the period ended December 31, unveiled on Friday, the brewer’s profits grew to Sh11.2 billion, defying a tough operating environment characterized by a high tax regime and counterfeiting.
The firm’s managing director and CEO, Jane Karuku, has termed the performance as ‘the strongest half-year performance in recent periods’.
She attributes the sound financial performance to macroeconomic recovery across the region, with inflationary pressures easing in most markets during the review period.
Interest rates began to trend downward, and currencies stabilised or strengthened, supporting improved consumer sentiment and business confidence.
“While household disposable incomes remained under pressure and input costs stayed elevated, the overall operating environment showed signs of recovery,’’ she said.
Net revenue grew by 11 per cent to Sh75.5 billion, supported by strong volume growth of eight per cent and effective revenue management.
“We also strengthened our balance sheet, with total debt reducing by Sh2.3 billion. Despite ongoing pressures on consumers, our teams executed with agility and precision across our markets.”
The board has recommended an interim dividend of Sh4.00 per share, subject to withholding tax.
This represents an increase of Sh1.50 per share over the prior year, reflecting confidence in the Group’s performance and outlook.
Growth remained uneven across markets. In local currency terms, net sales value rose 35 per cent in Tanzania, which accounts for 17 per cent of group sales, and 9 per cent in Uganda, which accounts for 21 per cent.
Kenya, the group’s largest market at 62 per cent of sales, recorded growth of two per cent, highlighting pressure on discretionary spending in the domestic market.
Innovations like flavored spirits and beers and ready-on-the-go products recorded a sizable growth, with products like KC Ginger dominating demand during the period under review.
The brewer has said that alcohol’s share of consumer wallets has declined as households cut back on discretionary spending, while illicit alcohol now accounts for about 60 per cent of total consumption, up from roughly 50% a few years ago.
By product segment, premium spirits, including tequila and Johnnie Walker, grew eight per cent, while mainstream spirits increased 17 per cent, reflecting a consumer shift toward more affordable offerings even as premium brands continued to expand.
About the proposed EABL – ASAHI transaction announced mid- December last year, the firm said it continues to engage with all stakeholders and remains confident that the transaction will further strengthen the business and support long-term value creation.
The UK-listed spirits group, Diageo, has agreed to sell its controlling stake (65 per cent) in EABL to Japan’s Asahi Group Holdings in a landmark transaction that values the region’s largest brewer at an implied enterprise value of $ 4.8 billion, equivalent to about 619 billion at the prevailing exchange rate.
by VICTOR AMADALA
