Covid-19: Eabl records a drop in sales

East African Breweries Limited (EABL) recorded a net sales decline of 3% to Kshs 44.5 billion for the half-year ended December 2020 compared to the same period last year.

The performance is 53% better than the previous half (January to June 2020) that was significantly impacted by Covid-19 restrictions.

This shows a sequential improvement and resilience of EABL’s brands, our employees and the business strategy. EABL’s spirits net sales grew by 10%, partially offset by beer net sales decline of 8% against the same period last year.

Decline in beer sales was primarily driven by Senator Keg due to Covid-19 related countrywide bar closures in Kenya.

“We have been able to adapt to the changing consumer needs while providing safe channels through which they have continued to enjoy our products. We remain cautiously optimistic about the second half of the year, not least because the pandemic and potential shifts in our trading environment present risks on the horizon. We will continue to stay close to our consumers, innovate to address the consumer patterns, tightly manage our costs, and with agility reallocate resources to address the dynamic operating environment.”
EABL Group Managing Director and CEO, Ms Jane Karuku.

Last month, EABL started the rollout of its Kshs 558 million ($5 million) East African fund in Kenya to help pubs and bars recover from the Covid-19 disruptions. The support constitutes hygiene kits, permanent sanitizer dispenser units, as well as protection screens for bars to comply with reopening protocols and to deliver the required hygiene standards. Eligible bar owners in the Nairobi metropolitan have until February 12, 2021 to apply for the support while fund launch dates in Uganda and Tanzania will be announced in coming months.

“We are committed to the safety and comfort of our customers and supporting the trade at this critical time when they are in need. We know this has been the most difficult time for the hospitality industry. We have no doubt that the Raising the Bar programme will provide the much-needed shot in the arm for these outlets at a time when they most need our support,” Ms Karuku said.

Markets Sales highlights for the first half:

➢ Kenya: declined 10% compared to the same period last year due to Covid-19 containment measures that saw continued closure of bars as well as a ban on sale of alcohol in restaurants in the first quarter. Although the bars and restaurants were re-opened in the second quarter, operations were impacted by the protocols implemented for safety of consumers as well as the restrictions of opening hours and the curfew.

➢ Uganda: delivered net sales growth of 13% compared to the same period last year. This was driven by leveraging wholesale channels, enlisting of new selling points at mini-shops, home deliveries and e- commerce partnerships.

➢ Tanzania: with minimal impact of Covid-19 related lockdowns, the market continued to deliver double-digit growth. Net sales grew 17% compared to the same period last year driven by broad-based growth across all categories. Beer net sales grew 17% with strong growth from the ongoing success of the Serengeti trademark.

The Group’s profit after tax for the six-month period declined by 47% compared to the same period last year to reach Kshs 3.8 billion primarily driven by a one-off tax provision. Further, excise duty increases, general price inflation and additional costs related to digital tax stamp implementation in Uganda impacted profitability.

PERFORMANCE HIGHLIGHTS

Net Sales in the half year declined 3% compared to the same period last year, despite the impact of on-trade restrictions and closures due to Covid-19
Administrative expenses down 6% compared to the same period last year, driven by savings in discretionary spend
Profit after tax declined 32% compared to the same period last year, excluding the impact of a one-off tax provision. The Group’s half-year profit of Kshs 3.8 billion is a significant improvement compared to the Kshs 0.2 billion loss recorded in the previous half (January to June 2020)
Gross margin improved to 43% from 38% in the previous half (January to June 2020), as bars were partially opened in the first quarter and further easing of restrictions in the second quarter which drove some recovery in volumes
In recognition of the uncertainty in the external environment and the need to conserve cash to enable the business to continue on a recovery trajectory, the Directors do not recommend an interim dividend