East African Breweries PLC (EABL) has posted an astounding 22 per cent decline in profit after tax to Sh6.8 billion for the first half of 2024 compared to a similar period in 2023.

According to EABL, the reduction in its profits for the first six months of the financial year was mainly due to inflation costs driven by the macro-economy and rising finance costs.

The brewer further revealed that the devaluation of the Kenya shilling also resulted in a Sh2.3 billion forex loss marking a surge of Sh2.1 billion compared to a similar period in 2024.

“The rising cost of business is a really big challenge for us combined with the rising inflation. The rising cost of living is also depressing the pockets of the citizens affecting their purchasing power,” said EABL Group Managing Director and CEO Jane Karuku.

However, EABL recorded Sh66.5 billion in net sales for the half year ended December 31, 2023, which accounted for a growth of 16 per cent compared to the previous year.

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During the announcement at EABL’s Ruaraka plant, Karuku said the Group’s volumes spiked by 2 per cent driven by consumer demand as it continued to expand its product portfolio.

EABL’s net sales also grew by 10 per cent in Kenya, 31 per cent in Uganda and 9 per cent in Tanzania as sales of beer grew at 18 per cent and spirits at 13 per cent in the said period.

Jane Karuku. PHOTO/MAC OTANI

“Our great brand building, brilliant commercial execution, as well as consumer insight led innovation, has allowed us to continue our revenue growth momentum,” said Karuku.

She added: “However, our bottom line has been impacted by increased costs of inputs, currency devaluation and rising interest rates.”

During the period in review, EABL spend on advertising and promotions grew by 16.5 per cent to Sh6.1 billion as its Sh1.2 billion microbrewery in Kenya commenced production.

“Our priorities for the second half are clear: we will remain consumer- centric and execute brilliantly to keep up with the dynamism in the market, drive cost efficiencies to grow margins and invest smartly in our brands and business,” the MD added.

Risper Genga Ohaga. PHOTO/MAC OTANI

The Kenyan brewer has continued to calls for a revision of the decision by Kenya Revenue Authority (KRA) to shift its policy to demand remittance of excise duty 24 hours after goods leave the stock room, away from the previous regime where companies used to remit the duty on the 20th of every month.

“We’ve been quite open with policy makers in saying this is extremely problematic. Administratively, it means you are reconciling your accounts daily. When we had it monthly, you close your books, you reconcile your numbers, you’re sure you have done the right number, the right submission, you can reconcile it, your general ledger and you’re correct,” said EABL CFO Risper Genga Ohaga.

She added: “Now, you pay excise, which is a consumption tax, you’re now paying it the moment you remove it (goods) from the store. You don’t know whether you have sold it or not. Next week when you sell it you start doing your adjustments - its chaotic!” 

The EABL Board has proposed an interim dividend of Sh1 per share, which will be paid on or about April 26, 2024 even as the brewer called for a review of the government’s tax regime.