East African Breweries PLC (EABL) posted a flat growth in earnings for the half year ended December 31, 2022, as high inflation and excise taxes affected sales growth.
The Group posted an Sh8.7 billion net profit under review, a marginal decline from the Sh8.73 billion posted in the same period in 2021.
Group volumes declined by 4 percent year-on-year as price increases impacted consumer purchasing patterns, mainly in mainstream and value segments.
Net sales grew at a slow 4 per cent to Sh57.3 billion from Sh54.8billion in HY 2021.
“EABL faced an exceptionally challenging time related to macro-economic volatility and drought across East Africa, global inflation, and geo-political disruptions related to the Russia/Ukraine war. This was further compounded by excise-related price increases in Kenya, effected in July and October, which significantly affected consumption of our brands,” said EABL Group Managing Director & CEO, Jane Karuku.
In July 2022, Kenya’s excise tax for beer and spirits came to effect following the 2022/23 Budget, increasing by 10 per cent and 20 per cent, respectively.
In October 2022, beer and spirits consumers were hit by a further 6.3 per cent excise tax increase in the form of annual inflationary adjustment.
These increases came from an annual upward excise adjustment in 2021, leading to a compounded annual excise tax increase of 23 per cent for beer and 34 per cent for spirits.
As a result, EABL’s net sales growth regressed by 1 percent in Kenya, its largest market, while Uganda and Tanzania grew by 19 per cent and 11 percent, respectively.
The EABL Board has recommended an interim dividend of Sh3.75 per share for the period under review.