KENYA: Serengeti inflates H1 sales at Diageo East African Breweries
- Half-year net profits leap by 38% to KES4.4bn (US$53m)
- Net sales rise by 36% to KES27.8bn
- Operating profits up by 20% to KES7.3bn
East African Breweries Ltd sees H1 sales, profits jump
Diageo's Kenya-based subsidiary, East African Breweries Ltd, has survived a weaker economic climate to report strong gains in sales and profits for its fiscal first-half.
Net sales for the six months to the end of December leapt by 36% on the same period of the previous year, to KES27.8bn (US$336m), East African Breweries (EABL) said this week. Its acquisition of a 51% stake in Tanzania-based Serengeti Breweries contributed to 13% of net sales over the period.
This reduced EABL's reliance on Kenya, although EABL's home market still accounted for almost two thirds of sales by value in the six-month period. The brewer's half-year net sales in Kenya rose by 14%. However, volumes rose by a more modest 3%, due to "turbulent" economic conditions and what the group described as "inconsistent application of new regulations" in the alcoholic drinks sector.
EABL's MD and CEO, Seni Adetu, said: “In the period under review, there was economic turbulence in the region, as manifested by currency fluctuations (and high Shilling depreciation), high interest rates and high inflation, with the result that operating costs and consumer disposable income were under severe pressure."
Off a smaller base, Uganda proved to be the standout growth market over the half-year. EABL's volumes in the country rose by 21%, with net sales up by 43% and operating profits close to quadrupling. Uganda accounted for a fifth of group net sales.
Stronger marketing costs, including a 55% rise in advertising and promotion spend, curtailed EABL's overall operating profits growth during the six months. Still, operating profits rose by 20% to KES7.3bn. Net profits benefited further from lower tax payments, to rise by 38% to almost KES4.4bn.
Looking ahead, Adetu said that EABL will invest more behind key brands, such as the strong-performing Tusker lager, as well as "ramp up spirits capacity". The group also plans to improve local sourcing of raw materials. Adetu added that he expects sales momentum to continue into the second-half.
For the company announcement, click here.
How do you define a truly international brand? And does it matter. Can it be decided purely on volumes? Patience Gould digs out her atlas as she ponders the issue...
- Have spirits companies forgotten the mainstream?
- Does alcohol accelerate the onset of dementia?
- Pernod's mood darkens over India - Analysis
- Why Scotch must drop the 'malts good, blends bad'
- Ashwagandha - The next functional drinks trend?
- Moet Hennessy unaffected by LVMH Dior buy
- Diageo to cut 105 jobs in Scotland, 50 in Italy
- Distell acquires majority stake in Cruz Vodka
- Portman Group heads to Tesco for new chief exec
- William Grant names Europe & NA Travel Retail head
- Global Scotch insights - market forecasts, product innovation and consumer trends
- Global Champagne and sparkling wine insights - market forecasts, product innovation and consumer trends
- Battle of the Generations - The fight for iGen, Millennial, Gen X and Baby Boomer consumers
- Myanmar - ISA Country Report
- Global vodka insights - market forecasts, product innovation and consumer trends