EABL blame 28% net profit drop on excise tax

EABL’s Group Managing Director Andrew Cowan

East African Breweries Ltd has reported a 28 per cent drop in half year net profits as it took a beating from a rise in excise tax and adjusted its earnings from last year’s sale of its glass manufacturing business.

The brewer yesterday said its net profit was Sh5.6 billion in the six months to December 2016, down from the Sh7.7 billion reported in a similar period last year. However, without the one-off Sh2.2 billion sale of Central Glass Industries (CGI), the brewer said its net profit from operating activities rose marginally by 2 per cent, to Sh5.6 billion.

“This financial year has been difficult with a tough external business environment. Excise tax has affected our customers’ ability to afford our products,” EABL Chairman Charles Muchene said at a media briefing yesterday. All its beer brands registered a decline except for emerging spirits.

EABL said revenues from the sale of its premium beer brands that include Guinness and Tusker malt declined by 13 per cent while the Ready to Drink (RTD)’s dipped 11 per cent. RTD include the Smirnoff Ice and Snapp that are targeted at female customers. Its mainstream beer, that include its flagship beer Tusker and Bell, recorded a 7 per cent decline.

It is only the emerging segments and down market alcohol such as Senator Keg and Balozi beer that registered a positive growth, growing by 10 per cent in the half year period. In overall, the decline saw its net sales decline by 6 per cent to Sh35.2billion.

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