EABL posts 12% profit decline amid currency devaluation, rising interest rates 

KENYA – East African Breweries Limited (EABL), a subsidiary of Diageo, reported a 12 percent drop in profit after tax, totaling KES10.9 billion (US$83.88M) for the fiscal year ending June 30, 2024.  

The decline was primarily attributed to currency devaluation and rising interest rates. 

Despite these challenges, EABL’s net sales surged by 13 percent to KES124.1 billion (US$955M), driven by strategic pricing, a robust portfolio, and innovative product launches.  

The company’s operating profit, excluding foreign exchange losses, grew by 10% to KES28.8 billion (US$221.64M) as strategic pricing and productivity initiatives helped offset cost inflation. 

In terms of product categories, the premium segment saw a 13 percent growth, outpacing the mainstream category, which grew by 10 percent. The beer category also performed well, registering a 12 percent growth. 

Geographically, Kenya led the company’s performance with a 15 percent increase in net sales value, contributing 65 percent of the group’s total revenue.  

Uganda and Tanzania also recorded strong performances, with net sales value increases of 12 percent and 9 percent, respectively. 

EABL’s Managing Director, Jane Karuku,  stated: “Interest rates continue to be a concern in Kenya, along with forex losses. Earlier this year, we dealt with droughts, and now we are facing floods and social unrest. Our consumers are under pressure to prioritize their spending.” 

The company’s net finance costs rose sharply by 49.04% to KES8.2 billion (US$63.1M), while foreign exchange losses surged by 84.34 percent to KES3.87 billion (US$29.78M) due to the weakening shilling. 

Although EABL’s tax obligation decreased to KES5.9 billion (US$45.4M)  from KES6.4 billion (US$49.25M) the previous year, the company criticized the unpredictable tax regime.  

This regime required firms to remit excise duty within 24 hours at the beginning of the financial year, forcing EABL to borrow up to KES2.2 billion (US$16.9M) monthly, adversely impacting its debt position. 

Risper Ohaga, EABL’s Chief Finance Officer, said: “You now have a whole army reconciling and correcting because you don’t want to underpay and be hit by penalties. You are constantly paying ahead and then trying to get back and rebalance the numbers.” 

Despite the profit decline, EABL’s Board declared a final dividend of KES6.00 (US$0.046) per share, bringing the total dividend for the year to KES7.00 (US$0.054) per share, an increase of KES1.50 (US$0.012) per share compared to the previous year. 

“We are confident in our long-term strategy, which is backed by the strength of our brands, solid commercial engine, supply footprint, and the talent and capability of our people,” the company stated. 

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