Kenya: East African Breweries reported a $76m half year pre-tax profit

East African Breweries looks set to remain one of the region's most profitable companies after it unveiled a Ksh5.3 billion ($76 million) half year pre-tax profit, which means that the group is on track to cross the Ksh10 billion threshold for the year, East African (Kenya) Via Thomson Dialog NewsEdge reported February 27.

Only one other East African company, Safaricom, which posted profits of Ksh12 billion ($171 million) last year, has ever reported bigger earnings. Last year, EABL recorded a pre-tax profit of Ksh9 billion ($128.5 million) on net revenues of Ksh21 billion ($300 million).

According to EABL's unaudited half-year results for the six-month period ending December 31, 2006, the group's operating profit rose by Ksh600 million ($8.6 million) to Ksh4.8 billion ($68.6 million) compared with the same period the previous year. Gross turnover totaled Ksh12.7 billion ($181 million), an increase of 14 per cent. Last week, the EABL board recommended an interim dividend of Ksh2.15 per share, which represents a 23 per cent increase compared with the Ksh1.75 per share paid last year.

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EABL has experienced dramatic growth in the past five years with its profits and return to shareholders rising steadily in the period.

According to the brewer, the good results recorded up to December last year were attributable to strong investment in operations, including a fully integrated SAP system that helped harmonise the group's business and significantly increased efficiency. Significant revenue gains were also made through consolidation and expansion of brand market shares, EABL said.

The group's portfolio of innovative and popular brands continues to grow and strengthen in market share, said the company last week. Brand development in Kenya and Uganda has been successful, especially for Senator, which has continued recording phenomenonal growth.

Last month, EABL continued its product entrenchment with a Ksh90 million ($1.3 million) promotion of its Guinness line, which is expected to push market share for the brand to above the current 13 per cent.

With the new campaign, we expect a 37 per cent increase in growth of Guinness volumes by the end of the financial year 2007," said Patricia Ithau, EABL's marketing director. According to Ms Ithau, Guinness had already recorded a 19 per cent growth in 2006.

A similar campaign for Tusker, which included the region's first live reality show, Tusker Project Fame, last year also helped expand the flagship's market share by double digit figures.

Earlier in 2005, EABL had moved to rationalise its brands, jettisoning poor performers like Pilsner Ice EABL's brand repositioning has gone hand-in-hand with greater investments in capacity, including a Ksh2.1 billion ($30 million) upgrade of subsidiary Central Glass Industries that saw the installation of a new furnace, and the relocation of spirit-maker UDV-Kenya to a new modern facility in Ruaraka, near Nairobi. In Uganda, EABL also put in more capital to establish East African Maltings Ltd to support the business of Uganda Breweries.

We will maintain a strong focus in all areas of our business, our people, our brands, on innovation and world-class production capability," said Gerald Mahinda, group managing director last week.

Over the past five years, EABL has also invested significantly to restructuring its business model in a program that has seen some departments or divisions off-loaded and the roles of others expanded.

Last November, for example, the company outsourced its beer by-products business, contracting a new company to take over the management of the by-products, which include dried brewer's yeast, spent grain, popularly known popularly as machicha and malt chaff commonly fed to farm animals.

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