EABL profit up 58 percent on new drinks sales

The East African Breweries Limited (EABL) has announced a 58 percent rise in net profit for the year ended June 30, 2018 to Ksh.11.5 billion.

The significant growth in profits by the brewer is attributed to the continued traction of new products in the market having stepped up its innovation in product diversification.

Innovation in new products contributed to a share of 24 percent of the firm’s Ksh.82.5 billion net revenue for the year.

Further, EABL’s new business line pushed up the group’s volumes up by 11 percent signifying a strengthened position across all of its categories and markets.

At the same time, the firm held down operational costs at Ksh.20.3 billion in spite of a substantive Ksh.11.7 billion capital expenditure including the completion of the Kisumu keg brewer during the financial year.

With the rebound in the bottom line which represents a bounce back from the 15 percent dip in earnings in the preceding period, EABL is expected to pay out a record dividend pay out to shareholders in seven years.

EABL board of directors have recommended a final dividend of Ksh.6.0 per share taking the total dividend for the year to Ksh.8.50 for the period to close in on 2012’s Ksh.8.75 final pay out.

The brewer had from 2017 embarked on an innovation drive to diversify its choice of drinks to consumers in response to changing consumer tastes and preferences and in light of increased market competition particularly from the entrance of foreign based entities such as Warsteiner.

At the time the East African based manufacturer would then launch new products including Tusker Cider, Chrome Vodka, Black & White and Captain Morgan Gold in addition to adding new flavours to its famed Kenya Cane and the Waragi brand in Uganda.

“We are always consistently tapping into our customers, understanding the shifts & trends and checking on how our portfolio step ups to respond to changes,” EABL Head of Innovation Fred Otieno told Citizen Digital in an earlier interview.

EABL however continues to operate in a difficult operating environment defined by weather risks and an unpredictable tax environment.

The brewer has already predicted lowered sales in 2019 as drought and inflationary pressures remain in the shadows with the late start to the long season rains in a factor which affects the sourcing of raw materials by the manufacturer.

Further, the National Treasury has once again raided the ‘sin’ industry impacting a Ksh.18 and Ksh.24 increase in excise duty levied on a 750 ml bottle of wine and whisky respectively as part of the tax proposals presented to Parliament with the aim of bulking up exchequer funding by an additional Ksh.37 billion over the 2019/20 financial year.