EAST AFRICAN BREWERIES TASK AHEAD

Much as shareholders of East African Breweries can afford to smile when yhey meet September 21st, there is an urgent task that must be tackled: Find a way to clip the wings of cost sale.

This is because in the full financial year to June 2017, it almost deprived all stakeholders of any smiles over 2017 performance.

According to the figures released yesterday August 24, the company's turnover increased by 9.21% to Kes 70.247bn but cost of sale grew almost 3 times faster by 21.8% to Kes 39.117bn.

Of course, in view of this, foundation profit (gross profit) decreased by 3.30% to Kes 31.13bn.

Hence, that EABL ended the year with 6.16% rise in profit before tax was due mainly to a firm grip overhead costs including the lucky break in late 2016 interest rate capping regime.

Total cost, says EABL, came to Kes 17.18bn, down 7.60% from 2016's Kes 18.593bn and included drop in interest paid from Kes 3.265bn to Kes3.174bn.

Because EABL ended 2016 year in dire need of cash closing that year with Kes 3.954bn cash shortfall, the lower interest paid was significant since there must have been some gap filling moves.

However, the situation by June 2017 was far better with Kes 3.318bn cash on hand and Kes 151m working capital surplus compared to Kes 6.513bn frightening deficit by June 2016.

Last April, dancing with the better tunes, the directors paid Kes 2 per share interim dividend and now, shareholders are not just going to formally approve that for the records but also, will need to approve final dividend of Kes 5.50 per share payable October 31 to shareholders in the books today, August 25, 2017.

EAST AFRICAN BREWERIES; Kes bn
                             Full year.
                             2017.             2016
Revenue.           70.247.          64.322
Cost of sale.    39.117.           32.110
Gross profit.    31.130.           32.212
Total costs.     17.180.           18.593
Profit before tax 8.515.            8.021
Profit margin %.  12.1.              12.3
Working capital    0.151         (6.413)
Cash balance.   3.318.           (3.954)

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