East African Breweries Limited (EABL) has reported Sh12 billion in net profit for the full year ended 30 June 2023, representing a 21 percent decline from Sh15.6 in the previous financial year.

The drop in earnings is primarily tied to a tough business environment occasioned by rising cost of input, multiple excise tax increases, and currency depreciation.

EABL’s volumes went down seven percent year-on-year, as sales were impacted by consumer purchase adjustments due to the harsh economic times.

“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.” Said EABL Group Managing Director & CEO, Ms. Jane Karuku.

The Group reported Sh109.6 in net sales, similar to the previous year.  At a country level, Uganda led in sales, with revenues growing by 17 percent ahead of Tanzania’s 1 percent.

EABL’s largest market, Kenya, was the worst performing, with net sales declining four percent on the back of excise tax escalation and a hostile business environment.

”Net sales in Kenya declined 4 percent with excise tax escalation impacting the price-sensitive mainstream segment. The trade environment in Kenya also impacted performance, particularly trade distractions leading to county-led bar closures.’’

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The firm’s board of directors approved a final dividend of Sh1.75 per share, adding to the interim payout of Sh3.75 per share, bringing the total dividend for the year to Sh5.50 per share.

Karuku said the company remained resilient despite the macroeconomic headwinds – including global inflation and geopolitical disruptions – which disproportionately raised costs and depressed consumer spending.

In addition, EABL’s shift to local sourcing of raw materials spared it from supply chain disruptions as a result of geopolitical events, particularly the Russia-Ukraine war, which affected the supply of key brewing ingredients such as grains.

The firm has contracted over 60,000 farmers from the East African region for the supply of barley and sorghum. Out of the 60,000 farmers, 47,000 are from Kenya.

EABL continued to reap from smart investment behind brands, digital and consumer experiences, investing Sh12.9 billion in capital expenditure during the year.