Beer giant, East African Breweries Limited (EABL), may have revved up its sales engine, but profit took a bumpy ride downwards in the first half of 2023. While revenue frothed by 16% to a cool Sh66.5 billion, net profit hiccuped by 22%, settling at Sh6.7 billion.
What sent profits spinning in the wrong direction? Blame it on a double whammy of a thirsty shilling and a global grain hangover.
The Kenyan shilling’s thirst for strength against other currencies guzzled Sh2.3 billion from EABL’s profits, a tenfold increase compared to last year. This forex hangover was further aggravated by a dependence on imported grains and ethanol, made scarce by regional droughts.
“It’s like the taps ran dry locally,” explained Risper Ohaga, EABL’s CFO. “We’re importing nearly 70% of our ethanol now, and that stings our forex budget.” This thirst for imported essentials pushed EABL’s cost of sales up a hefty 21%, putting the squeeze on profits.
But EABL isn’t letting the party flatline. CEO Jane Karuku is serving up a three-pronged plan to get the good times flowing again.
Karuku acknowledges the profit slump could have been a real downer if taxes had gone up again. “We dodged a bullet there,” she says. But with increased marketing muscle and a promise to trim the fat, EABL hopes to turn the tide in the second half.
