The East Africa Breweries Plc (EABL) has slashed by half its payout to shareholders from Ksh.11 to Ksh.5.50 per share on drop in earnings to Ksh.12.3 billion, the listed company has said in its audited financial statement.
The 21 per cent drop in earnings, the company said, is attributed to high taxes, shrinking disposable income and inflation which EABL says could not shrug off for the year ending June.
EABL’s board of directors has recommended a final dividend of Ksh.1.75 per share subject to withholding tax and is due for payment in October. This brings the total dividend for the year to Ksh.5.50 per share, from a high of Ksh.11 last year.
In its disclosure, the company has pointed to a change of mind by consumers, ostensibly switching to cheap unregulated liquor as a reason for the drop in earnings, even as over Ksh.12.9 billion has been injected into capital venture activities.
“Specifically, regional economic slowdown and inflationary pressure not only impacted consumers’ disposable income but also increased the cost of doing business,” EABL told stakeholders.
It adds: “The economic conditions have also led to a resurgence in illicit brew trade as consumers move to cheaper unregulated products.”
Moreover, the Kenya shilling which has been on a free fall for months, EABL group chairman Dr Martin Otieno has said, edged out a continued profit-making streak, hoping for better business environment.
“We have delivered these results in a period deeply impacted by high cost inflation, multiple excise tax increases and currency depreciation in Kenya,” Dr Otieno said.
Even with sales stagnating at Ksh.109.6 billion pre-tax, the sales of beer took a hit by seven per cent, corroborating with data by KNBS which pointed to an increase in prices of beer between 2021 and 2022 on increased excise duty.
Meanwhile, the company has revealed that sales in Uganda and Tanzania rose by 17 and one percent respectively, but fell by four percent in the Kenyan market.
