East African Breweries Plc (EABL) #ticker:EABL more than doubled its net profit to Sh8.7 billion in the half-year ended December, helped by increased sales on the reopening of bars and pubs.
The company had made a net profit of Sh3.7 billion a year earlier. The performance saw the brewer return to paying dividends, declaring an interim payout of Sh3.7 per share or an aggregate of Sh2.96 billion.
EABL suspended dividends after the economic crisis and closure of bars eroded its earnings in the wake of the Covid-19 pandemic. The company last paid an interim dividend of Sh3 per share for the half year ended December 2019.
The new proposed payout will be made on April 27 to shareholders who will be on the register as of February 28. More Nairobi Securities Exchange #ticker:NSE -listed firms that had suspended dividends in the Covid era are expected to resume cash distributions.
They include Equity Group #ticker:EQTY and Absa Bank Kenya #ticker:ABSA which have said they will return to paying dividends after recording strong recovery in their earnings ahead of the close of their financial year ended December.
EABL profit growth was helped by higher net sales which increased 23.4 percent to Sh54.8 billion from Sh44.4 billion.
“Across the region, we have seen an easing of Covid-19 restrictions contributing to a more favourable trading environment, as consumers return to pubs and bars,” the brewer said in a statement. “The broader economic rebound across East Africa continues to strengthen consumer demand across all our product categories, supporting our overall performance.”
In Kenya, EABL’s biggest market, restrictions on bars and pubs’ operating hours were removed in October last year.
The move helped increase net sales in the local market by 27 percent, the company said. Net sales in Uganda and Tanzania on the other hand rose 18 percent and 15 percent respectively.
EABL said its capital expenditure increased 51 percent to Sh6.2 billion in the half year ended December as it responded to rising consumer demand.
The cash was spent on capacity expansion in Tanzania and Uganda. The company’s net debt declined to Sh34.7 billion from Sh40.7 billion a year earlier, helped by a restructuring of borrowings and improved profitability.
The company raised Sh11 billion through a corporate bond and used the proceeds to invest in its operations and retire other borrowings. EABL’s managing director Jane Karuku said the company is cautiously optimistic about the short-term economic outlook.
“The trading environment remains uncertain with the lingering socio-economic impact of the pandemic, excise tax volatility, and the upcoming electioneering period in Kenya,” Mrs Karuku said in a statement.
“However, we are cautiously optimistic that the regional economies will continue on the recovery path, sustaining growth momentum across East Africa.”