East African Breweries Limited Plc share price fell by 11.6 percent on Friday after the company slashed its interim dividend following a 22 percent drop in profits through six months to December 2023.
The stock price dropped to Sh104.50 at the close of trading on Friday from Sh118.25 the previous day.
On Thursday, EABL cut its interim dividend to Sh1 per share from Sh3.75 previously after posting lower earnings in the six-month period.
Its dividend distribution has trended downwards since peaking at Sh11 in the year ended June 2022 on the back of a strong recovery from the depressed Covid-19 period.
The brewer’s six-month profit slid by 22 percent to Sh6.7 billion as high operational costs, increased debt service expenses and a weakened Kenya shilling offset gains made from increased sales.
EABL, for instance, booked a foreign exchange loss of Sh2.3 billion compared to a loss of just Sh209 million a year prior.
Meanwhile, net finance costs rose to Sh3.9 billion from Sh2.3 billion, an impact of rising interest rates.
Moreover, the brewer’s cost of sales rose to Sh37 billion from Sh30.7 billion due to high inflation in the economy.
The rising costs surpassed gains made from a two percent growth in sales volumes which revealed resilience in consumer demand against reduced disposable consumer incomes.
EABL also credited the expansion of its product portfolio in the period.
The company said it spent Sh6.1 billion on marketing in the review period which also saw its microbrewery, built for Sh1.2 billion, begin production.
