East African Breweries (EABL) net earnings plummeted by 12% to KES 10.9 billion in the fiscal year ending June 30, 2024, primarily due to a surge in illicit alcohol consumption.
The company grappled with a challenging operating environment characterized by high interest rates, forex losses, inflation, and social unrest across its East African markets.
EABL Chairman Martin Oduor Otieno disclosed that the challenges led to foreign exchange losses surging by 10% to KES 28.8 billion.
Economic pressures compelled consumers to shift towards cheaper, illicit alternatives, impacting EABL’s sales.
Despite a 13% increase in net sales to KES 124.1 billion, driven by strong spirits performance, the company’s profitability was eroded by rising costs and foreign exchange volatility.
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East African Breweries Plc (EABL) Income Statement |
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| Income Statement | FY’2023 | FY’2024 | Y/Y Change |
| Kshs (bn) | Kshs (bn) | ||
| Net revenue | 109.6 | 124.1 | 13.2% |
| Cost of Sales | (62.2) | (70.3) | 13.0% |
| Gross Profit | 47.4 | 53.8 | 13.5% |
| Operating Costs | (21.1) | (25.0) | 18.4% |
| Operating Profit | 26.3 | 28.8 | 9.6% |
| Forex losses | (2.1) | (3.9) | 84.3% |
| Net Finance Costs | (5.5) | (8.2) | 49.0% |
| Profit Before Income Tax | 18.7 | 16.8 | (10.4%) |
| Income Tax Expenses | (6.4) | (5.9) | (7.6%) |
| Profit After Tax | 12.3 | 10.9 | (11.8%) |
| Earnings Per Share-Annualized | 12.5 | 10.3 | (17.4%) |
| Dividend Per Share | 5.5 | 7.0 | 27.3% |
| Dividend yield | 3.5% | 4.5% | 1.0% |
| Dividend payout ratio | 35.3% | 50.9% | 15.6% |
Source: East African Breweries Plc (EABL) FY’2024 financial statements
The government’s crackdown on illicit alcohol, including stringent licensing requirements and increased inspections, further disrupted EABL’s operations.
EABL Proposes Hefty Dividend Payout
EABL has recommended a dividend of KES 7 per share for the year ending June 30, 2024.
“From a cash flow perspective, we have closed the year with KES10.8 billion, which enables us to pay a dividend at KES 6 per share” Group CFO, Risper Ohaga.
This represents a significant increase from the previous year’s dividend of KES 5.50 per share. If approved by shareholders, the dividend will be paid on or about October 28, 2024, to shareholders registered by September 16, 2024.
While the company remains optimistic about long-term growth prospects, it faces significant hurdles in the near term.
“The Board remains committed to guiding the company through this unpredictable environment with a focus on long-term value creation. We remain prudent and optimistic about the growth prospects for our business.”
