Mahinda: I did it my way

By Kenneth KwamaWhen shareholders of East African Breweries Limited welcome new Group CEO Seni Adetu, they will definitely be hoping for fresh ideas to breathe extra pace into the firm’s revenues.Adetu takes up the position from Mr Gerald Mahinda, who has already earned himself a place in the company’s Hall of Fame.For Mahinda, it will be the culmination of a long, and oten brutish spell, during which he shepherded the brewer to the top 50 bracket in the continent, and helped it double its market value to more than Sh2.5 billion in just five years. He is expected to take up his latest appointment at South Africa-based BrandHouse some time next month. BrandHouse is a joint venture between Diageo Plc, the largest shareholder in EABL, and two other partners, Heineken and Namibia Breweries Limited. It is currently building a beer factory in Johannesburg. The most iconic brands under its ambit include Amstel beer, Heineken, Windhoek Lager and Guinness."The South African job is a bigger mandate because that economy is eight times bigger than Kenya’s. Actually, half of all the beers consumed in the continent are gobbled up in South Africa," says Mahinda.The appointment means Mahinda, whose game-changing innovations helped firmly put EABL on the path to greater success, will now straddle a bigger market encompassing countries like Angola, Mauritius, Mozambique, Botswana, Zimbabwe and Madagascar to prove his prowess. To investors, Mahinda has offered a compelling portfolio — a recession-resistant investment option, profitable enough for them to buy into in good and bad times. Under Mahinda, the company has deftly been swinging in tandem with every shift in consumer tastes, and is yet to read the market wrong."Despite the difficult business environment we have been facing across the region, I am happy that we grew our volumes by eight per cent and net sales by 12 per cent in last year’s half year results," he says.According to the outgoing CEO, Tusker, Guinness, Bell and Senator are the main drivers of the growth, both in Kenya and Uganda. But it is Senator that is exploding the market and making the guys at EABL grin with happiness.&#12288;Rising pre-tax profits"We only sell it for Sh20 — the price of a soft drink," laughs Mahinda. "But it is the fastest brand in terms of growth and has even overtaken Tusker. Actually, it is the fastest growing brand within the Diageo family, which is a testimony to the fact that the market is responding positively to its pitch."Under him, the brewer has not only demonstrated it has the ability to ride out business cycles and sustain results, but its profits have also climbed to phenomenal levels. Actually, it used to be the most profitable company in the region until mobile company, Safaricom, reared its profits. But the brewer’s sales and profits have been on an upward climb since Mahinda took over in 2004. For instance, the pre-tax profits have risen steadily from Sh2.7 billion in 2002 to Sh9 billion in 2006. Net revenue for the 2004/5 financial year stood at Sh19 billion and the company closed the year with a net profit of Sh5.8 billion.The company finished its most recent fiscal year with net revenue of Sh18 billion and profit after taxation of Sh4.9 billion for the half-year results for the period ended December 31, 2008. The strong performance defied the economic slowdown, which led to lower disposable income. This, coupled with increased taxation for both malt and non-malt beers and spirits, pushed up prices of the company’s products.By close of business Friday, the company’s shares were trading at Sh130 per share, a far cry from the Sh450 per share price when Mahinda took over in 2004. &#12288;careerThe share tumble was due to a jittery market and long period of negative growth at the Nairobi Stock Exchange, and had nothing to with the company’s management. Mahinda, who says there is no thrill in being a mid of the pack-performer, thinks it is interesting that all these MDs, including himself, have all worked in Nigeria at some point of their career."Don’t you think so?" he poses. "Maybe there is something special about working in Nigeria," he laughs. He has worked at Corporate Insurance Company (1985-1990) and American Life Insurance Company (Alico) between 1990 and 1995, where he was responsible for Kenya, Uganda and Zimbabwe. It is during these formative years that the management guru learnt to edge his way in the corporate world. He says when he graduated from the university, he vowed to become a chief accountant before he was 30."I did it. Actually, I would like to encourage young people to have dreams and follow them. That is the only way to give yourself targets and strive to achieve them."However, it was at Standard Chartered Bank, while working as the director of finance for Kenya, Uganda and Tanzania (1995-1998) that Mahinda caught public attention for initiating a comprehensive rationalisation exercise that left hundreds of bank workers jobless and scores of branches closed.That is how mighty Mahinda cut his managerial teeth. The move would later blend in well with Central Bank of Kenya (CBK) requirements and was copied by other banks that were striving to comply and also cut operational costs. He initiated similar reforms at EABL (1999-2003) as the group finance and strategy director before taking a one year hiatus to Guinness Nigeria Plc, where he briefly worked as strategy and change director before returning to EABL in 2004.

Mahinda: I did it my way

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