· Net sales up 13% to Kshs 41.6 billion
· Profit after Tax up by 33% to Kshs 6.6 billion
· Operating margin improves by 2.3ppt
· Strong cash performance drives reduction in net debt despite Kshs 4.8 billion capital expenditure
· Interim proposed dividend Kshs 2.50 per share
Nairobi, Kenya: January 25, 2019: East African Breweries Limited (EABL) has announced a pre-tax profit of Kshs 9.7 billion during the half year ending 31 December 2018, representing a 33% rise compared to the same period last year.
Net sales grew 13% to Kshs 41.6 billion. Growth was broad-based across segments and regions, as the business benefitted from lapping a weak half following the presidential election in Kenya. Kenya and Uganda both saw net sales increase by 12% and Tanzania was up 26%. Beer grew 12%, driven by Senator Keg performance in Kenya, improved mix in Uganda and continued strong delivery of Serengeti in Tanzania. Spirits grew 16% on the back of strong performance in mainstream spirits and Scotch whisky as well as vibrant innovations.
Pre-tax profit growth of 33% was driven by continued focus on productivity, partially offset by up-weighted marketing investment. Strong cash conversion and lower interest rates drove reduction in interest charge in the year, helping boost the bottom-line.
EABL Group CEO, Andrew Cowan, said: “We have delivered a solid set of results and we are pleased with this half-year performance. We have made progress against our performance ambition, delivering broad-based growth across regions and categories. There is still a lot more to do across all our markets, but this half-year performance proves that we can get there if we continue to focus on strategic execution across our business.”
He added: “Our strategy, which aims to deliver a vibrant mainstream beer, explode our mainstream spirits, win in premium and recruit from illicit alcohol, has given all our businesses a broad and solid foundation from which to deliver a more consistent performance in the future.”
In Kenya, growth in beer was driven by Senator Keg, up 35%, as a result of increased distribution, commercial initiatives as well as the rejuvenation of the brand through powerful national campaigns. Sustained marketing investments behind key bottled beer brands such as Tusker (Tusker Masaa ya Mbili Mbili) and Guinness (Win a Chance to Meet Rio Ferdinand) helped deliver that bottled beer performance year-on-year, despite the impact of excise-driven price increase.
Spirits net sales grew 17% driven by mainstream spirits. The growth in mainstream spirits benefitted from increased investments in spirits capacity in Kenya which has helped support the launch of successful local innovations such as Captain Morgan Gold.
Uganda’s beer net sales grew 11% driven by the premium and mainstream categories, supported by campaigns such as Bell All Stars Tour, Pilsner Super 8 and Tusker Lite’s Absolutely Nothing to Prove. Spirits net sales grew 16%, led by growth in mainstream spirits.
Tanzania’s growth momentum continued during the period at 26%, driven by consistent growth of the Serengeti trademark up 65%, supported by Lite with a bite Serengeti Lite Promotion and National football team sponsorship.
Reflecting on the half-year ahead, Mr Cowan said: “In the last financial year, we deliberately invested behind our performance ambition through a step-change in our investments behind brands, capital expenditure and capability to sustain future growth momentum. With our new brewery set to become fully operational soon, we expect to provide more and better drinking options, expanding our beverage alcohol universe further.”