Tough times for beer seller EABL
10 August 2014, 10:25
Nairobi - East African Breweries Limited's
pretax profit fell 6 percent to 10.41 billion
shillings ($118.56 million) in its year ended June, the company
said on Thursday.
The firm, controlled by Britain's Diageo, said its
sales volumes were hit by the imposition of an excise tax on its
low-end Kenyan beer, Senator Keg, last October.
Previously exempt from excise duties, Senator Keg's price
shot up to 40 shillings per mug from 25 shillings, putting off
consumers and forcing EABL to launch a new bottled beer for the
low-end of the market.
The government introduced the taxes to shore up its revenues
but it failed to meet the targeted revenue through the duty
after sales plummeted by more than 70 percent.
EABL's Chief Executive Charles Ireland said the company may
stop producing the beer, which is dispensed from barrels in
bars, if the government does not reverse its decision on taxes.
"We need to have a hard look at Senator unless the taxes are
rolled back. At the current level, Senator is not sustainable,"
he told a news conference.
Other categories, including mainstream beers such as Tusker
and premium whiskeys such as Johnnie Walker, grew by single to
double digits across Kenya, Uganda, Tanzania and other export
markets, helping to raise the net sales value by 4 percent to
61.30 billion shillings.
Tracey Barnes, EABL's finance director, said operating
profit for the period to the end of June fell 2 percent to 14.67
billion shillings, mainly due to a one-off item of 1.2 billion
shillings spent on restructuring and job cuts at the company.
EABL maintained the dividend per share for the year at 5.50
shillings including an interim dividend of 1.50 shillings.
Shares in the brewer, rose about 7 percent over the past
week but lost 1.3 percent on Thursday to close at 309 shillings
each. EABL's results were announced after the markets closed.
For the latest on national news, politics, sport, entertainment and more follow us on Twitter and like our Facebook page!