Breweries post positive results for half year

Namibia Breweries Limited (NBL) maintained its strong market position despite a strained local economy, challenges in export markets and declining consumer spend.

In their recently released results for the half year ended 31 December 2016, Namibian, South African and export volumes increased by 1.1%, 33.1% and 7.3% respectively. Revenue increased by 13.6% and operating profit was 6.5% higher than the comparative period.

According to NBL, the solid increases are attributed to a positive volume mix and focus on production. Headline earnings per share is up by 3.2%, while earnings per share is down by 45% as a result of an increased equity loss from associate. The increase in share of losses from NBL’s associate is mainly attributable to an increased shareholding, as well as final adjustments as a result of the restructuring of the South African operations. The NBL Board declared an interim dividend of 42c on 2 March 2017, which represents an increase of 5% from the previous period.

NBL Managing Director (MD), Wessie van der Westhuizen said, “Our half-year financial performance is testimony to our long-term business strategy as defined by the O&L 2019 Breakthrough Plan. That will continue to guide us in building a breakthrough organisation, and live our purpose statement of ‘Creating a Future, Enhancing Life’. Despite the challenging environment we currently operate in, NBL still enjoys a majority market share.

NBL Finance Director, Graeme Mouton said, “NBL maintained an operating margin of 22% despite the challenging trading environment. Overall NBL has delivered good performance in the last 6 months, mainly driven by the growth in South African production volumes. Total beer volumes sold to export markets increased by 7.7% compared with the previous period. The focus export markets, Tanzania and Zambia, continued to show good growth. Export volumes to Botswana and Mozambique declined in comparison with the prior period.

Following the restructuring of DHN Drinks in the previous period, the new Heineken partnership delivered volume and market share growth while restructuring and regenerating the business. The increased volumes to South Africa during this period reduced the impact of tough local trading conditions.

Meanwhile, Van der Westhuizen said, “We are optimistic that we will continue to deliver positive results. NBL still enjoys a majority market share, and will continue to drive growth through diversification into other beverage categories. NBL will continue to focus on expanding its product portfolio, which includes the soft drinks and non-alcoholic beverages portfolios that appeal to a wider consumer base, in Namibia as well as South Africa and beyond.

“We are confident that the improvements in the South African business will continue and further contribute to the profitability on both sides. NBL and Heineken South Africa are exploring a combined effort in optimising the supply footprint in Southern Africa as well as possible synergies in the export market,” he said.