Ms Jane Karuku, EABL chief executive. FILE PHOTO | NMG East African Breweries Limited (EABL) projects to restart dividend payouts this financial year on higher beer and spirit prices in a period when unit sales are expected to rise.
EABL managing director Jane Karuku said the brewer’s profit margin is forecast to recover from effects of Covid-19, helping reverse a freeze on dividends that followed flat earnings.
The brewer has been hit in the wake of Covid-19 restrictions, including the night curfew and reduced drinking hours in pubs.
The firm last paid an interim dividend of Sh3 per share, or Sh2.37 billion, for the six months ended December 2019.
As part of the recovery strategy, EABL raised beer and spirits prices on June 18, an increase that looks set to boost sales in a financial year when the State is yet to impose new taxes.
The State increased taxes on beer and spirits by 4.94 percent inflation in October last year, and EABL opted to absorb the additional taxes.
“Last year we absorbed that, but we can no longer afford to do that again. So we have increased prices so that we can meet increasing costs of excise tax rates,” Ms Karuku said.
“We are also hoping that volumes will grow… [and] if volumes grow, then we utilise our assets [plant capacity] better and that can also improve margins. We will also focus on cost controls and efficiencies.”
Recommended beer prices rose as much as Sh20 while the price of premium spirits such as Johnie Walker Black Label and Singleton 15 Years increased by up to Sh100.
The price review came in the month EABL unsuccessfully lobbied lawmakers to have inflation-adjusted excise duty reviewed every two years from current annual adjustments.
“It’s unfortunate we didn’t succeed because what it means is that the excise duty will go up by inflation rate of probably five to six percent,” Ms Karuku said.The firm, controlled 50.03 percent by British drinks group Diageo, spent Sh6.72 billion, or Sh8.5 per share, on total shareholder payouts when profit peaked at nearly Sh11.52 billion for the year ended June 2019.“Our target (to return to 2019 profit margins) is this year,” Ms Karuku said. “We think we have robust recovery plans and our strategy is working and we think we can go there faster cognizant of unpredictable nature of the pandemic.”EABL’s after-tax profit fell by a marginal 0.84 percent to Sh6.96 billion in the year ended June […]
