COVID-19 cuts EABL profits by $28.7m

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A beer maker company, East African Breweries Limited (EABL) has felt the hottest heat from the closure of bars and restaurants in the wake of COVID-19 pandemic.

EABL’s net earnings fell by Ksh2.87 billion ($28.7 million) in the financial year ending June 2020. Most of the East African countries enforced the strictest lockdowns while others like Tanzania, South Sudan and Burundi have issued public health advisories hence alarming impact on the economy.

According to Chief executive of AIB Capital, a Nairobi-based stock brokerage and corporate finance advisory firm said it is not going to be EABL alone issuing statements of profit drop.

“It will not be a surprise to see more companies in manufacturing, hotel and hospitality sectors issuing a reduction in their profits,” he said.

The management of the firm has confirmed that due to measures put in place to curb the deadly infectious disease, it will cause a sharp fall of earnings to about Ksh8.64 billion ($86.4 million). The profit will surpass the 2018 net earnings of Ksh7.25 billion ($72.5 million).

Shutting down of bars and keeping social distancing are the major measures that were set by the regional governments, something that did not spare drinkers and waiters in various premises. The management added that net revenue for EABL increased by 12 per cent in 2019 to Ksh82.5 billion enabling the giant brewer to pay its shareholders a total dividend of Ksh8.50 per share.

However, the board of directors of the company hereby informs its shareholders and the general public that EABL’s current performance forecast indicates a decline in profit after tax of approximately 25 per cent for the financial year ending June 30 compared to the prior year.

During the six months’ period to December 31 2019, EABL’s net profit increased by nine per cent to Ksh7.2 billion ($72 million) from Ksh6.6 billion ($66 million) in the same period in 2018, with net sales in Tanzania growing 19 per cent compared with 10 per cent and eight per cent in Uganda and Kenya respectively.

EABL is worried about Kenya that the consistent increase in excise tax by the government has a negative impact on its business.

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