East African Breweries Limited (EABL) has reported a one per cent drop in net profit for the year ended 30th June 2021, due to cost inflation, tax and foreign exchange impact.
The brewers’ profit before tax jumped two per cent to KSh10.9 billion during the year.
Group Managing Director and chief executive Jane Karuku said through fiscal 2021, the pandemic continued to impact the business negatively across East Africa due to the restrictions in Kenya and Uganda and the general decline in disposable incomes in the region.
Net cash from operating activities was up 337 per cent to KSh14.6 billion, attributed to tight management of working capital and productivity initiatives.
In the period under review, the group made a capital investment of KSh7.8 billion, by investing ahead to support growth.
According to Karuku, year on year revenues in all the three markets of Kenya, Uganda and Tanzania improved by 10 per cent, 33 per cent and 15 per cent respectively.
However, Kenya had strong revenue growth in the second half, growing 45 per cent and off-setting a 10 per cent decline in the first half, a performance achieved through expanding and adapting the product portfolio.
In light of the continued uncertainty in the external environment due to Covid-19 related restrictions, no dividend was declared.
“We forecast even better earnings going forward as economies reopen which will enable the brewer to return to full production capacity,” Sterling Capital Research says in their commentary note.
The share is trading at a discount and we maintain a BUY recommendation guided by our fair value estimate of Ksh 214.70 representing an upside of 16.4% from the current price of Ksh 184.50.