Cheap Beer Boosts Full-Year Profit at Diageo’s Kenyan Unit

Source: bloomberg.com
Bella Genga bgenga
July 28, 2016

EABL posts 7% increase in profit to 10.3 billion shillings

Recommends full-year dividend of 5.50 shillings per share

Low-end brands such as Senator beer helped East African Breweries Ltd., the region’s largest brewer, post a 7 percent increase in full-year profit to 10.3 billion shillings ($101.6 million) in the 12 months through June.

The distributor of Diageo’s brands such as Johnnie Walker whiskey and Guinness stout products controls most of Kenya’s beer market and half of the country’s spirits business.

“The performance was largely driven by continued growth in the spirits category, recovery of Senator in Kenya, and innovation across all markets,” it said in a statement e-mailed from the capital, Nairobi.

The so-called emerging beer segment, which includes brews such as Senator in Kenya, Ngule in Uganda and Pilsner in Tanzania, grew by 112 percent, Kenya’s second-biggest company by market value said. Mainstream beer was down 6 percent, while premium and emerging spirits declined by 9 percent and 2 percent respectively.

EABL, which is 50.03 percent owned by London-based Diageo, said the group’s net sales were flat following a declining performance in its South Sudan business and the negative foreign-exchange impact of a currency devaluation in the nation. Volumes in that country fell 60 percent as intermittent fighting between men allied to the president and his main rival disrupted businesses.

Overall net sales came in at 64.3 billion shillings from 64.4 billion shillings a year earlier.

EABL shares closed 4.4 percent higher at 285 shillings before the results were announced.