East African Breweries is not so bullish even after posting a 59 per cent growth in net profit for the financial year ending June 2019.
The brewer posted a profit after tax of Sh11.5 billion in the 12 months to June growing from a weaker base of Sh7.2 billion in a similar period in 2018. It, however, cautioned shareholders against expecting a repeat of such robust performance this year.
Revenues increased 12.4 per cent to Sh82.5 billion from Sh73.4 billion buoyed by increased sales of Senator Keg in Kenya and mainstream beer in Uganda and Serengeti Lite in Tanzania.
Moreover, the firm slashed its expenses, spending less on excise taxes and financing costs.
EABL Group CEO Andrew Cowan said the scale of growth in its three markets of Kenya, Uganda and Tanzania and high taxes and volatility in the exchange rate may deny it such a strong performance in 2019.
“We are fully conscious that the strong growth we are reporting this year is the result of a comparatively weaker performance in the last period, primarily due to political uncertainty in Kenya,” said Cowan.
With such a comfortable cash position, said EABL Group Finance and Strategy Director Gyorgy Geiszl, the company may opt to repay its Medium Note or claw back the money to its investors.
Net sales for bottled beer grew by eight per cent while Senator sales went up by about a third in what the brewer attributed to improved disposable income.
As a result, EABL’s liquidity improved with the brewer delivering operating cash flow of Sh22.6 billion compared to Sh13.6 billion. However, after inflation adjustment on excise duty was effected and the new tax measures yet to take effect, EABL is not as optimistic.
Mr Cowan said they have challenges with tax authorities from the three East African countries, noting they have been having “adult-conversations” with the three governments. “Predictability in excise environment is not only good for us, but even Government can benefit,” said Cowan.