EABL profit sinks by 39pc as COVID-19 restrictions dent sales
The East African Breweries Limited (EABL) has announced a 39 percent dip in profit after tax for the year ending June 2020.
The Nairobi Security Exchange (NSE) listed firm has attributed the significant decline in earnings to a dent on sales observed in the past six months owing to Covid-19 restrictions.
The company has seen a nine percent decline in net sales with a 10 percent first half growth being wiped out by a corresponding 29 percent decline marked between January and June this year.
EABL has seen is greatest hit to sales in Kenya with net sales declining by 14 percent in the year having marked a 37 percent decline from partial lockdowns measures that left bars and restaurants closed.
The company meanwhile marked a 5 percent decline in its Ugandan market from similar containment measures by government.
EABL Managing Director Andrew Cowan says the firm has been forced to manage working capital tightly in the last three months including the re-allocation of spending on advertising and promotion to emergency measures.
“During this unwelcome pandemic, our top priority has been to safeguard the health and well-being of our people and support our communities, while taking necessary action to protect our business. Across the markets we have tracked changes in consumer behaviour and repurposed our execution plans in trade to continue serving our consumers where safe and possible to do so,” he said.
EABL’s has however registered a saving grace in Tanzania where net sales have grown by 14 percent from last year owing to the country’s limited restrictions to convert the Covid-19 pandemic.
The company is now focused on re-emerging strongly from the current crises and has since set aside Ksh.500 million to support the recovery of on-trade outlets in Nairobi, Kampala and Dar es Salam as part of its mother company-Diageo Ksh.10.7 billion ($100 million) ‘Raising the Bar’ global fund.
“Going forward, our market teams have put in place robust plans to help us emerge stronger from this crisis once the measures are eased across our markets. We will continue to execute with discipline and invest prudently to ensure we are strongly positioned for a recovery in consumer demand,” added Cowan.
Pushed by the decline in sales, EABL has adopted a cash conservation stance and its board has not recommended a final dividend to shareholders leaving April’s Ksh.3 per share interim dividend as the final pay-out.
The holdback marks a 64.7 percent slide in shareholder pay from the total dividend pay-out of Ksh.8.50 registered last year.