East African Breweries reports one of its strongest recent performances, with net revenue rising 13% to KSh146 billion and total debt falling by KSh4.8 billion as the brewer increases shareholder returns.
East African Breweries Plc posted a sharp increase in full-year earnings, with profit after tax jumping 49% to KSh18.2 billion as revenue growth, tighter cost management and lower financing expenses lifted the brewer’s performance.
Net revenue rose 13% year-on-year to KSh146 billion for the year ended June 30, according to the company’s financial results. The increase was supported by volume growth across its beer and spirits businesses, alongside productivity initiatives and disciplined cost management.
The earnings growth significantly outpaced revenue growth, pointing to an improvement in the company’s profitability as EABL benefited from lower financing costs and continued efforts to improve productivity.
Total debt declined by KSh4.8 billion during the financial year, strengthening the group’s balance sheet and reducing its exposure to financing costs.
The results come as consumer-facing companies across East Africa continue to contend with affordability pressures, elevated household expenses and changing consumption patterns.
EABL said the macroeconomic and operating environment across East Africa remained broadly stable during the year, with relatively steady currencies, contained inflation and a more favourable interest-rate environment.
“We delivered one of our strongest performances in recent years, achieving net revenue growth of 13% to Kshs. 146 billion. Profit After Tax increased by 49% to Kshs. 18.2 billion, supported by volume growth, effective cost management, and lower financing costs, while total debt reduced by Kshs. 4.8 billion, further strengthening our balance sheet,” Group Managing Director and Chief Executive Officer Jane Karuku said.
Debt reduction gives EABL more room
The KSh4.8 billion reduction in debt is an important part of EABL’s financial performance, coming alongside the sharp increase in profit.
Lower debt and financing costs can provide the brewer with greater flexibility to invest in its brands and operations while improving the resilience of its balance sheet.
EABL said its performance was driven by the breadth of its portfolio, market reach and disciplined execution across the business.
The company’s portfolio spans beer and spirits, giving it exposure to multiple segments of the alcoholic beverages market across East Africa.
Dividend rises 59%
The stronger earnings are also translating into higher returns for shareholders.
EABL’s share price increased 43% during the financial year, closing at KSh269 on June 30. The board recommended a final dividend of KSh8.7 per share, subject to withholding tax.
That takes the total dividend for the year to KSh12.70 per share, representing a 59% increase from the previous financial year.
The higher payout underscores the improvement in EABL’s earnings while giving investors a larger return following a year of strong financial performance.
Affordability remains a challenge
Despite the strong results, EABL continues to operate in an environment where consumers face pressure on disposable incomes.
The company said inflationary pressures eased toward the end of the year, although energy and food costs remained elevated.
EABL also highlighted growing concerns around illicit alcohol consumption, reinforcing the need for continued collaboration between governments, regulators and industry players.
The issue presents both a regulatory and commercial challenge for established alcohol manufacturers, which compete against products outside the formal and regulated market.
Regional portfolio supports growth
EABL’s business is concentrated in three core markets — Kenya, Uganda and Tanzania — while its products are sold in more than 10 countries across Africa and beyond.
Its portfolio includes Tusker, Guinness, Bell Lager, Serengeti, Kenya Cane, Chrome, Johnnie Walker, Captain Morgan and Smirnoff.
The breadth of the portfolio gives EABL exposure to both mainstream and premium segments of the market and allows the company to pursue growth across different consumer categories.
The brewer said its performance ambition remains focused on being one of Africa’s best-performing and most trusted consumer products companies.
Outlook
EABL remains optimistic about its prospects but expects consumer affordability pressures and fiscal challenges to remain factors in the operating environment.
The company said it remains confident in its strategy and ability to capture growth opportunities across the region.
“We remain well positioned to deliver sustainable growth through our diversified portfolio, market-leading brands and talented teams,” Karuku said. “As we continue to invest in our business and our communities, we are confident in our ability to create long-term value for shareholders while contributing positively to the socio-economic development of East Africa.”
For investors, EABL enters the new financial year with a combination of stronger earnings, higher shareholder distributions and a lower debt burden.
The 49% increase in profit, against 13% revenue growth, also signals that the brewer’s cost and productivity measures are beginning to translate into stronger bottom-line performance.