East Africa Breweries Plc (EABL) has announced a 50% reduction in its payout to shareholders, from Ksh. 11 to Ksh. 5.50 per share, due to a drop in earnings to Ksh.12.3 billion for the full year ended June 30, 2023.
The company attributes the 21% decrease in earnings to high taxes, reduced disposable income, and inflation.
EABL’s board of directors has recommended a final dividend of Ksh. 1.75 per share, subject to withholding tax and payable in October.
This brings the total dividend for the year to Ksh.5.50 per share, down from Ksh.11 in 2022.
In its financial statement, EABL cites a shift in consumer behaviour towards cheaper, unregulated liquor as a contributing factor to the drop in earnings, despite over Ksh. 12.9 billion being invested in capital venture activities.
“The consumer's income has become more depressed leading to a rise in consumption of illicit alcohol, which now constitutes over 50% of the market. The government needs to get tougher to protect the consumers.” Group CEO Jane Karuku #EABL2023FYResults pic.twitter.com/Ys2aIOFU7y
— East African Breweries PLC (@EABL_PLC) July 28, 2023
“The regional economic slowdown and inflationary pressure have impacted consumers’ disposable income and increased the cost of doing business,” EABL stated.
“Further, currency deterioration, higher taxes and rising interest rates particularly in Kenya further impacted our business performance. The economic conditions have also led to a resurgence in illicit trade as consumers move to cheaper unregulated products.”
East African Breweries Limited also noted that economic conditions have led to a resurgence in the illicit brew trade as consumers seek out cheaper, unregulated products.
EABL group chairman Dr Martin Otieno added that the depreciation of the Kenya shilling has also affected the company’s profitability.
“We have delivered these results in a period deeply impacted by high-cost inflation, multiple excise tax increases, and currency depreciation in Kenya,” Dr Otieno said.
Despite sales remaining steady at Ksh.109.6 billion pre-tax, beer sales decreased by 7%, consistent with data from the Kenya National Bureau of Statistics (KNBS) indicating an increase in beer prices between 2021 and 2022 due to increased excise duty.
We delivered a net profit of Kshs 12 billion, a 21 percent decline, on the back of rising input costs, multiple excise tax increases and currency depreciation which could not be fully offset by increased prices and cost management initiatives. #EABL2023FYResults pic.twitter.com/sl0jDf1Xhy
— East African Breweries PLC (@EABL_PLC) July 28, 2023
