21 February 2014

Uganda: Bell Closes Gap On Tusker

East African Breweries Ltd has announced its half-year results for the six months ended Dec.31, which indicate an improvement in net sales in Uganda compared to the other countries in the region, thanks to the performance of Bell Beer, its flagship product in the country.

The results, which were released on Feb.14, showed that Uganda registered a net sales value growth of 17% - almost three times higher than Kenya's 6% and the group average of 6%. There was also a strong performance on Waragi Gin.

Generally, the company posted a net revenue growth of 4% and a 4% rise in profit after tax, despite "significant challenges" experienced in Kenya, Tanzania and South Sudan in the same period. Across the region, the company experienced double digit net sales growth in the premium and mainstream beer and spirits categories.

"We are particularly pleased by the 17% organic net revenue growth in Uganda as a result of improved availability, mix and pricing initiatives," said EABL Group Managing Director Charles Ireland at an investor briefing in Nairobi, Kenya.

Generally, net sales grew by 4% across the region. Tusker retained its market leadership position and grew 17% above last year, while Guinness grew by 24%. Bell grew by 16% as a result of stronger communication, activations and price increases, according to Ireland. Serengeti Lager grew by 3% through the Fiesta Music Tour and route to consumer changes. There was also a strong growth in spirits across all sectors. Senator declined by 47% driven by the excise duty increase in Kenya.

Overall, the cost of sales declined by 1% due to a reduction in raw material costs and the implementation of initiatives to optimise production processes, according to the company. Administrative expenses grew by 26% as a result of the impact of one-off costs related to the recent organisational restructuring, as well as incremental investments to streamline back office processes in Tanzania. However on an underlying basis, administrative expenses grew by 13%. During the period, net financing costs remained broadly flat, which led to a 5% improvement in profit attributable to shareholders (Kshs 3.9bn). An interim dividend of Kshs 1.50 per share has been recommended.

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