EAST Africa Breweries Limited full year profit after tax dropped 38 per cent to Sh6.9 billion attributed partly to higher financing costs and a challenging market in Uganda and Tanzania.
The alcohol manufacturer's pre tax profit dropped 27 per cent from Sh15.3 billion in 2012 to Sh11.1 billion in the year ended June 2013.
Last month, the company had issued a profit warning to its shareholders over the anticipated drop citing the sale of 20 per cent stake in Tanzania Breweries in which the company got Sh3.6 billion which was a one off benefit that was not included in this year's results as it was the case last year.
The plunge in profit, EABL said, was due to high interest costs on Sh19.5 billion loan it took to purchase 20 per cent SABMiller stake in Kenya Breweries Limited. The financing cost of this loan only covered seven months in the prior year and a 12 months in the year under review, causing the big profit dent in 2013.
"I would characterise it as an ok year," said group managing director Charles Ireland.
Net sales increased by six per cent from Sh55.5 billion to Sh59 billion. Kenya accounted for 67 per cent of total net sales, Uganda 16 per cent, Tanzania 12 per cent and other export markets like South Sudan and Rwanda among others brought in 5 per cent. Sales volumes increased slightly by 3 per cent.
"There was a fundamental weakness in economy in Uganda due to donor funding reduction, less money in the economy public sector workers were not paid for months...so the market environment was not conducive to vibrant consumer prodduct businesses," said Ireland.
The company has announced a dividend payout of Sh5.50 per share totalling Sh4.3 billion for the year which is equivalent to 63 per cent of the value of profit after tax for the period.