EABL ANNUAL PERFORMANCE DECLINES

EABL ANNUAL PERFORMANCE DECLINES

By Ednah Kiarie

East African Breweries Limited (EABL) recorded

a 9% decline in net sales for the financial year

ended 30 June 2020, as first half growth of 10%

was offset by a 29% decline in the second half.

The second half decline was due to the impact

of the Covid-19 pandemic which saw

containment measures implemented across

East Africa from late March 2020.

The pandemic impacted EABL’s business

performance after three consecutive

double-digit halves of growth, with profit for the

year declining by 39% to KShs 7 billion from

KShs 11.5 billion in the previous year.

Markets Net Sales Highlights for the financial

year 2020:

Kenya: Declined 14% versus prior year. First half

growth of 8% was offset by second

half decline of 37%, as the partial lockdown

from March to June led to closure of bars and

restaurants. Mainstream and value spirits

remained resilient and registered 2% growth

versus prior year as the category benefitted

from a shift of outlet consumption occasions to

at-home consumption.

Uganda: Declined 5% versus prior year, as

first half growth of 10% was offset by the

impact of a total lockdown from March to June

resulting in a 21% decline in sales in the second

half.

Tanzania: Grew 14% versus prior year, as

first half growth of 19% slowed down to 10% in

the second half as Government restrictions in

response to Covid-19 were limited. Double-digit

growth in premium and mainstream beer

segments and improved spirits performance

supported a strong delivery for the financial

year.

EABL Group MD and CEO, Andrew Cowan, said:

“During this unwelcome pandemic, our top

priority has been to safeguard the health and

well-being of our people and support our

communities, while taking necessary action to

protect our business. Across the markets we

have tracked changes in consumer behaviour

and repurposed our execution plans in trade to

continue serving our consumers where safe and

possible to do so.”

Mr. Cowan said EABL focussed on managing

working capital tightly in the last quarter,

reducing discretionary expenditure and

reallocating resources such as advertising and

promotion (A&P) spend to new and emerging

channels in order to serve our consumers

safely.

EABL has made a significant contribution

through trade and community initiatives across

the region. To help East African communities

emerge from the effects of the pandemic, EABL

has funded provision of hand sanitisers

distributed to frontline health workers and

vulnerable communities to the tune of Kshs 70

million. Further, the company donated Kshs 50

million to Kenya’s Covid-19 Emergency Fund,

bringing the total contribution towards the

pandemic to Kshs 120 million.

In Uganda, UBL donated hospital mattresses,

hand-washing stations and fuel to enable

frontline health workers to alleviate the

situation in healthcare centres. And in

Tanzania, SBL delivered a hygiene awareness

programme and donated hand-sanitisers to

help combat the spread of the pandemic.

In view of the pandemic’s impact on bar owners

across East Africa, EABL is committing KShs

500 million to support the recovery of on-trade

outlets in Nairobi, Kampala and Dar es Salam

as part of Diageo’s $100 million ‘Raising the

Bar’ global fund. This funding will be used to

support the implementation of hygiene

measures, provision of practical equipment and

provision of free digital support and training to

enable outlets to transform how consumers will

be served when bars reopen.

“Going forward, our market teams have put in

place robust plans to help us emerge stronger

from this crisis once the measures are eased

across our markets. We will continue to execute

with discipline and invest prudently to ensure

we are strongly positioned for a recovery in

consumer demand,” Mr. Cowan said.

In recognition of the uncertainty in the external

environment in the face of the Covid-19

pandemic and the need to conserve cash to

support the business, the Board of Directors do

not recommend a final dividend. Consequently,

the interim dividend of KShs 3 per share paid in

April 2020 will be the full and final dividend for

the year.