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Virus eats Sh3b off EABL full-year profits

BUSINESS
By Frankline Sunday | May 17th 2020

Movement restrictions due to the Covid-19 pandemic has cost East African Breweries Ltd (EABL) Sh2.9 billion in profits.

According to a notice the region’s largest brewer released to its shareholders yesterday, EABL said it expects a profit decline of approximately 25 per cent for the financial year ending June 30 2020. This is compared to the profit the company declared at the same period last year.

The company posted Sh11.5 billion in profit after tax for the full year ending June 30 2019 up from Sh7.3 billion made in 2018.

“The Covid-19 global pandemic and the subsequent response measures taken across the region have impacted our business negatively,” states the firm in the notice to shareholders.

“Consequently, the Board of Directors hereby informs its shareholders and the general public that EABL’s current performance forecast indicates a decline in profit after tax of approximately 25 per cent for the financial year ending June 30 2020 versus the prior year.”

Closure of pubs

Increased sales of spirits and the budget Senator Keg beer saw overall sales climb by 10 per cent to Sh45.9 billion.

The closure of pubs, restaurants and hotels in March as a result of the coronavirus outbreak meant a freeze on a huge chunk of the company’s distribution network.

Last week, the government allowed hotels and restaurants to re-open if they maintain tight health protocols, including facilitating screening for employees and physical distancing for customers.

Many establishments, particularly those serving informal areas, complained that the restrictions were prohibitive and made it difficult to maintain normal operations.

EABL said it has deployed a raft of measures to minimise the impact of the pandemic on its business.

The company’s share price at the Nairobi Securities Exchange (NSE) has risen steadily in the past two months to a high of Sh180 at the beginning of this month.

However, by the close of trading on Friday, it had since dropped to Sh165. British multinational alcoholic beverages company Diageo, is EABL's majority shareholder.

 

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