EABL yearly profits drops by ksh.3b as kenyans drink less.

The high cost of living crisis in the country has affected kenyans’ drinking tradition of beer that is always considered immune to recession.
East African Breweries Plc (EABL), which reported a 20.8% decline in profit for the fiscal year that ended in June to Ksh12.3 billion, has cut its dividend payout in half, to Ksh5.50 per share.
In addition to the interim payout of Ksh3.75 per share, the company’s board of directors has proposed a final dividend of Ksh1.75 per share, bringing the total to Ksh5.5 per share. This payment is 50% less than the one from the previous year, which included an interim dividend of Ksh3.75 per share and a final dividend of Ksh7.25 per share for a total of Ksh11 per share.
To stockholders with records as of 15 September, the new final dividend will be paid on 27 October. A combination of higher indirect taxes, cost of sales, and net finance charges is mostly to blame for EABL’s decreased profit from Ksh15.6 billion a year earlier.
For instance, the cost of sales increased from Ksh56.6 billion to Ksh62.2 billion while net finance costs increased from Ksh4.2 billion to Ksh5.5 billion. The increasing expenses were used to counterbalance a little increase in gross sales, from Ksh193.9 billion to Ksh197.6 billion. EABL claimed that some of the costs could not be offset by higher prices for its selection of alcoholic beverages and cost-cutting measures. The company ascribed some of the costs to the impact of excise increases, inflationary pressures, and currency depreciation.
“Over the past year, our company has operated in an environment that has grown more challenging due to a variety of macroeconomic headwinds. In particular, the regional economic slump and inflationary pressure not only affected consumers’ disposable incomes but also sharply raised corporate costs, according to a statement released by the brewer on Thursday.
“Additionally, the performance of our firm was hurt by deteriorating currency, increasing taxes, and rising interest rates, particularly in Kenya. As consumers switch to less expensive, unregulated goods, the economic situation has also contributed to a boom in illicit trade.
According to EABL, volume decreased as consumers changed their buying habits.
The benefits of the company’s pricing strategy and improved product mix were outweighed by the volume decline, particularly in the beer category of EABL.
Sales increased by 17 and 1%, respectively, in Uganda and Tanzania but decreased by 4% in Kenya.
The EABL board of directors has predicted that the company will continue producing growth by investing in its key brands despite the operational challenges.
Since this year’s Finance Bill did not include any more changes to the duty rates, EABL is anticipated to benefit from the first pause in excise duty on alcoholic beverages in five years. In addition, revisions made to the bill prevented the Kenya Revenue Authority (KRA) from making the annual adjustments to the rate of excise duty for inflation that were previously made. The business reported that it spent an additional Ksh12.9 billion over the course of the year to finish projects that would help its long-term growth.