EABL half-year profit sinks by 47 per cent to Ksh.3.8 billion

The East African Breweries Limited (EABL) has announced a 47.3 per cent dip in profit for the half year period ending in December 2020 to Ksh.3.8 billion from Ksh.7.2 billion.

The sharp decline in earnings is largely attributable to lower sales resulting from tough COVID-19 containment restrictions which saw bars shut down for months alongside a one-off tax provision.

The impact of the restrictions became more profound in the operating period that at full year stage in June with EABL reporting a 5 and 3 per cent decline in volumes and net sales.

The sales however represented growth in comparison to the period between January and June last year at Ksh.44.5 billion but grew slower than Ksh.45.9 billion in December 2019.

At country level, the Kenyan market represented the slack in EABL’s business with sales dipping 10 per cent while sales in Tanzania and Uganda grew by 17 and 13 per cent respectively.

In July, EABL reported a 39 per cent slump in full earnings to Ksh.7 billion with overall sales slacking by nine percent.

The companies’ administrative expenses meanwhile reduced by six per cent to Ksh.4.3 billion on discretionary spending.

The conservative stance saw cash generated from operations top Ksh.17.9 billion from Ksh.15.2 billion even as the Group’s current liabilities increased to Ksh.41.4 billion from Ksh.36.9 billion a year before.

EABL has relied on e-commerce to grow sales under the continued volatile operating environment which still features restrictions to the operation of bars and other entertainment joints.

The firm is however optimistic of a rebound in the second half even as it manages expectations on the level of growth.

“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. 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,” said EABL Group Managing Director Jane Karuku.

EABL has since doubled orders on raw material purchases from farmers in response to rebounding alcohol consumption.

Similarly, the EABL has unveiled a Ksh.558 million fund to support the recovery of bars from COVID-19 related disruptions.

The firm has not declared an interim dividend as it adopts a cash preservation stance. EABL’s earnings per share (EPS) has declined to Ksh.2.71 from Ksh.7 in 2019.