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Covid-19: East African Breweries issues profit warning  

Sunday May 17 2020
EABLPIX

An employee of the East African Breweries Limited checks on beer quality before labelling April 17, 2019 at the company's plant in Ruaraka, Nairobi. PHOTO | SIMON MAINA | AFP

By FRANCIS MUREITHI

As coronavirus pandemic continues to disrupt economic activities in the country, some companies have issued cautionary statement on their profits margins.

East African Breweries Limited (EABL), the leading beer makers in the region, has joined the growing list of companies listed in Nairobi Securities Exchange (NSE) to announce a decline in profits.

The EABL announcement is stipulated in the provisions of the Fifth Schedule and Capital Markets dealing with Public offers, listing and disclosures Regulations of 2002.

NEGATIVE IMPACT

EABL, in a public notice said that Covid-19 global pandemic, and subsequent response measures taken across the region have impacted on its business negatively.

“Consequently, the Board of Directors of the Company hereby informs its shareholders and the general public and the 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 in comparison to the previous,” the company said in a public notice signed by its chairperson Martin Oduor-Otieno on Saturday.

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Last year, the company, which has presence in Kenya, Uganda and Tanzania saw its net revenue rise by 12 per cent to Sh82.5 billion. This was driven by strong underlying performance on the back of stable operating environment in the region.

Profit before tax grew to Sh17.8 billion while profit after tax grew to Sh11.5 billion up from Sh7.3 billion posted same period in 2018. The total dividend for 2019 was Sh8.50 per share.

This was attributed to increased revenues and cost efficiencies across the organisation.

EABL profit is mainly driven by brands such as Serengeti Lite, Tusker, Cider, Chrome Vodka, Captain Morgan Gold and Uganda Waragi Pineapple.

POPULAR BRANDS

By Friday, the company shares at NSE were selling at Sh165.

Mr Otieno said the company had deployed raft of measures to minimise the impact of the pandemic on its business.

“EABL’s top priorities are the safety of its people and to remain cost efficient during this period. The board remains confident in EABL’s long term strategy,” added Mr Otieno.

The company has seen its sale of its popular beer brands shrink across the region due to the outbreak of the pandemic.

The government has also issued a dusk to dawn curfew to combat the pandemic and this has seen most drinking joints remain closed as clients stay at home to observe the social distancing measures.

Covid -19 has left many blue chip companies at NSE in financial losses. Firms like tyre manufacturing firm Sameer Africa have announce its intention to exit the business.

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