East African Breweries PLC (EABL), a leading alcoholic beverage company in the region, has released its audited financial statements for the fiscal year ending June 30, 2024, revealing a complex picture of resilience amidst challenging economic conditions.
Martin Oduor Otieno, EABL’s group chairman, provided insight into the company’s performance, highlighting the turbulent economic landscape that shaped the fiscal year. He stated,
“The past year has been marked by significant macroeconomic volatility across East Africa. Inflationary pressures, regulatory changes, rising interest rates and fluctuating currency posed substantial hurdles for consumer spending and business operations.”
The chairman elaborated on the specific challenges faced by the company, particularly emphasizing the impact of currency devaluation in Kenya, EABL’s largest market. Despite these obstacles, Otieno reported some positive outcomes:
“On this backdrop, EABL has posted a strong revenue growth of 13% with operating profit (excluding FX impact) growth of 10%. Profit after tax declined 12%, mainly impacted by currency devaluation and significant increase in finance costs.”
Financial Highlights for the Fiscal Year
Metric | Performance |
---|---|
Net sales | Increased by 13% to KSh 124.1 billion |
Sales volume | Grew by 1%, attributed to strategic pricing and product innovation |
Operating profit | Rose by 10% to KSh 28.8 billion (excluding foreign exchange impact) |
Profit after tax | Decreased by 12% to KSh 10.9 billion |
Cash reserves | Improved by KSh 1.8 billion, reaching KSh 10.8 billion |
Total debt | Reduced by KSh 11 billion |
Dividends
In a move that may surprise some investors given the profit decline, EABL’s board of directors has recommended an increased dividend payout.
The proposed dividend of KSh 7 per share represents a significant increase from the previous year’s KSh 5.50 per share. This decision suggests confidence in the company’s financial stability and a commitment to rewarding shareholders despite short-term challenges.
The dividend, subject to withholding tax, is scheduled for payment on or around October 28, 2024. Shareholders registered by the close of business on September 16, 2024, will be eligible for this payout.
EABL’s financial results reflect the company’s ability to generate revenue growth and maintain operational efficiency in a difficult economic environment. The increase in cash reserves and reduction in debt indicate prudent financial management.
However, the decline in profit after tax underscores the significant impact of external economic factors, particularly currency devaluation and rising interest rates, on the company’s bottom line.