Local brewer Bralirwa profits dropped by 83.5 per cent in 2019 from Rwf7.2 billion in 2018 to Rwf1.2bn in 2019, the company's financials indicate.
While the sales volume went up by 5.4 per cent to 1,886 000 hectoliters from 1,790,000 hectoliters in 2018-, as did the revenue by 1.8 per cent to over Rwf 100B, expenses shot up eating into profits.
For instance, financials indicate that Selling and distribution expenses rose by 74.5 per cent to over Rwf 7.8bn while 'other operating expenses' grew by 1360 per cent to Rwf4.4bn.
Administrative expenses at the brewer rose by 26 per cent to over Rwf 12bn.
Merid Demissie, the Managing Director of Bralirwa noted that while topline (such as sales) results had improved compared to the previous year, financial results had been affected by a number of one-offs including prior-year tax adjustments, impairment on the loan to Bramin and a number of provisions.
Bramin mechanised and Irrigated Maize farm is a joint venture between Bralirwa and Minimex.
"In 2019, the overall top-line results improved compared with 2018. Revenue management combined with a focus on cost savings as well as operational efficiencies positively impacted both the top line and gross margin,"
"Despite this positive top-line performance, operating results were adversely impacted by a number of one-offs including prior-year tax adjustments, impairment on the loan to Bramin and a number of provisions," he noted.
He noted that in 2019, the company also made investments in its people, brands, capacity, sustainability and digital solutions to maintain sustainability.
The firm will be seeking approval from shareholders during the next Annual General Meeting to withhold payments of dividends owing to what they termed as uncertainties on the extent and duration of disruption due to COVID-19.
"Given the significant uncertainties on the extent and duration of the disruption as a result of the COVID-19 outbreak, the Board is taking steps to protect our cash flow to preserve liquidity in the interest of our company, and as such proposed not to pay out any dividend on the 2019 result. This proposal will also be subject to approval during the upcoming AGM," the company said.
The firm has previously found itself at crosshairs with Rwanda Revenue Authority following tax audits which revealed discrepancies estimated at about Rwf 6B.
Debt wise, the firm's the USD denominated long-term IFC loan is now Rwf14.6 billion, with total debts by Bralirwa standing at Rwf41.3 billion from Rwf 47.7B in 2018.
The brewer is yet to make any returns from Bramin JV farm which is currently in its 6th year of commercial farming as it was found to be requiring further improvement in operational results, efficiencies, cost savings and crop rotation in order to become profitable.
While continued investment somewhat dented the brewer's financials, the company said that they expect a turnaround of the farm to become profitable in the near future.
Going forward, Outlook 2020, the firm cited uncertainties resulting volatility in the global economy are expected to continue to impact African economies in the coming year.
"Our initial plan for 2020 was further top line, profit and margin growth in the context of continued outperformance of the Rwandan economy relative to the broader African region driven by new product introductions, cost management and further debt reduction," the company said in a statement.
The brewer fears that the firm the outbreak of COVID-19 they said represents an unprecedented health crisis and macroeconomic risk, which is likely to have a significant impact on the economy and their business in the near term.
However, they noted that it is not possible to assess the extent and duration of this crisis and its impact on the economy and the firm business.