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Covid 19 Impact Drops Breweries Sales

East African Breweries Limited (EABL) recorded a 9 percent decline in net sales for the financial year ended 30 June 2020, as first half growth of 10 percent was offset by a 29 percent 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.

According to EABL, the pandemic impacted its business performance after three consecutive double-digit halves of growth, with profit for the year declining by 39 percent to Sh7 billion from Sh11.5 billion in the previous year.

Giving their annual performance declines Thursday, EABL Group MD and CEO, Andrew Cowan said that Kenya net sales for the financial year 2020 saw a decline of 14 percent versus prior year, Uganda transactions declined with 5 percent, while Tanzania’s grew by 14 percent versus the previous year.

In Kenya, for example the first half growth of 8 percent was offset by second half decline of 37 percent as the partial lockdown from March to June led to closure of bars and restaurants.

However, the mainstream and value spirits remained resilient and registered 2 percent growth, versus prior year as the category benefitted from a shift of outlet consumption occasions to at-home drinking.

Cowan explained that across markets, they have tracked changes in consumer behaviour and repurposed execution plans in trade to continue serving consumers where safe and possible to do so.

“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,” he said.

Cowan added that EABL focused 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 consumers safely.

To help East African communities emerge from the effects of the pandemic, Cowan said that EABL has funded provision of hand sanitizers distributed to frontline health workers and vulnerable communities to the tune of Sh70 million.

Further, the company donated Sh50 million to Kenya’s Covid-19 Emergency Fund, bringing the total contribution towards the pandemic to Sh120 million.

In view of the pandemic’s impact on bar owners across East Africa, EABL is committing Sh500 million to support the recovery of on-trade outlets in Nairobi, Kampala and Dar es Salam as part of one of the world’s largest producers of beer, Diageo’s Sh1 billion (USD100 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 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,” 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 has not recommended a final dividend.

Consequently, the interim dividend of Sh3 per share paid in April 2020 will be the full and final dividend for the year.

By Wangari Ndirangu

 

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