East African Breweries Limited #ticker:EABL (EABL) net profit has dropped to six-year low on state closure of bars to contain Covid-19 spread, forcing the brewer to freeze final dividends.
The brewer Wednesday announced a 39 percent drop in net profit to Sh7 billion for the year ended June 2020 with net sales for the second half of the year having plunged by 29 percent. The latest performance is in contrast to the Sh11.5 billion net profit posted in the previous financial year and is the lowest since 2014 when it posted net profit of Sh6.85 billion.
Shareholders of the brewer will now miss out on the final dividend, which has historically been between Sh5.50 and Sh6 per share as the firm goes into cash –preservation mode.
“In recognition of the uncertainty in the external environment in the face of the Covid-19 pandemic and the need to conserve cash to support the business, the directors do not recommend a final dividend,” said the firm.
The decision will save the company up to Sh4.7 billion, going by last year’s final payout of Sh6 per share.
The brewer's full year net sales dropped by 9.2 percent to Sh74.9 billion, with the brewer singling out bars closure from March as the main reason.
“There was a significant decline in sales following the closure of outlets and restrictions on movement primarily in Kenya and Uganda,” said the firm.
Kenya reported its first Covid-19 case on March 13, prompting government to take several control measures including suspension of social events, closure of bars and limiting alcohol sale to take-away only.