- EABL reported strong profit growth in H1 2024 despite challenging economic conditions.
- Reduced interest costs and favorable foreign exchange gains were key drivers of profitability.
- Sales growth was driven by innovative products and improved product mix.
- Rising input costs and shrinking disposable incomes remain significant challenges.
- Illicit trade continues to pose a threat to the company’s business.
- EABL remains committed to sustainable growth and value creation for its shareholders.
East African Breweries Limited (EABL) announced a 20% surge in profit after tax to KSh 8.1 billion in the first half of 2024, compared to KSh 6.8 billion in the same period last year. This growth was primarily driven by reduced interest costs and favorable foreign exchange gains.
EABL reported a 2% increase in sales to KSh 67.9 billion, underpinned by a 1% volume growth achieved through innovative product launches, strategic pricing, and an improved product mix. However, the company faced challenges including rising input costs, shrinking disposable incomes, and persistent currency volatility.
“Despite these positive shifts, challenges to our business prevailed,” EABL stated in its earnings report. “Shrinking disposable income has reduced alcohol’s share of wallet, while consumers are increasingly seeking value.”
The cost of sales increased by 7.4% to KSh 39.8 billion, while finance costs declined by 13% to KSh 3.4 billion due to a KSh 4.9 billion debt reduction. Operating expenses rose by 4.9% to KSh 13.7 billion.
EABL highlighted the impact of low disposable incomes and higher costs on consumer behavior, leading to increased illicit trade and constrained purchasing power. The company emphasized the need for government intervention to mitigate the impact of unregulated alcohol trade.
The company’s cash and cash equivalents increased to KSh 14.1 billion, driven by revenue growth and improved working capital management.
In terms of organic growth, the Tanzanian unit led with 16%, followed by Kenya at 9% and Uganda at 3%.
EABL has recommended an interim dividend of KSh 2.50 per share to be paid on or about 30th April 2025.