East African Breweries Ltd.’s (EABL) sales in Kenya have decreased by 1% as a result of the country’s ongoing increase in excise taxes since last July, flattening the group’s earnings in the six months leading up to December 2022.
In contrast to its half-year profits in December 2021, which were more than quadruple the $33.11 million recorded the prior quarter as Covid-19 limitations lifted regionally, its net profit in the time stalled at Ksh8.7 billion ($69.9 million).
The brewer claimed that Kenya, its largest market, had flat growth mostly as a result of a sharp increase in excise taxes, which led to price rises and drastically altered consumer spending patterns.
Beer and liquor excise taxes in Kenya increased by 10% and 20%, respectively, in the budget for the 2022–23 fiscal year. In October last year, the charges increased once again by 6.3 percent in order to account for yearly inflation.
According to a statement released on Thursday, “These increases came on the back of an annual upward excise adjustment in 2021, leading to a compounded annual excise tax increase of 23 percent for beer and 34 percent for spirits,”
Apart from the tax increase, Jane Karuku, the chief executive of EABL, stated that the business climate in the first half of the fiscal year ending in June has been challenging, with a number of issues slowing sales growth.
According to Ms. Karuku, “EABL faced an exceptionally challenging time related to macro-economic volatility and drought across East Africa, global inflation, and geo-political disruptions related to the Russia-Ukraine war.”
The chief financial officer, Risper Ohaga, stated that the main reasons that hampered their growth during the time were inflation and the increase in excise duty, which resulted in a 0.9 percent reduction in earnings before interest and tax.
However, despite the difficult circumstances, net sales managed to increase by 4% from $479 million in the prior year because to continued expansion at its subsidiaries in Tanzania and Uganda.
Similar to previous year, the brewer issued an interim dividend of Ksh3.75 ($0.030) per share, which would be paid to shareholders in a total of $23.8 million.