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Growth volumes in SA contribute to breweries stellar financial results

Growth volumes in SA contribute to breweries stellar financial results

Namibia Breweries Limited (NBL) said that the growth in volumes sold to South Africa despite a particularly challenging year, which was characterised by severe drought, unpredictable exchange rates and rapidly shifting consumer tastes, contributed to a stellar financial performance in 2017.

The breweries this week delivered another solid financial performance with operating profit, revenue and volumes growing by 13%, 12% and 8%, respectively.

The NBL Board declared a final dividend of 42c on 5 September 2017, which represents an increase of 5% from the previous period.

NBL Managing Director (MD), Wessie van der Westhuizen said,“Our performance demonstrates NBL’s resilience and ability to adapt to changes within our operating environment. It is also the direct result of our employees taking ownership of challenges and instead creating opportunities to bring our purpose to life. Without this, NBL would have delivered a very different result in 2017.”

In terms of beer volumes, the breweries at the presentation said volumes continue to grow and NBL still enjoys a majority market share in Namibia.

In February 2017, NBL announced Tafel Lager as the official sponsor of South Africa’s Griquas Rugby Union team. “We have seen exceptional growth of this brand in South Africa and identified this sponsorship as an opportunity to further strengthen its visibility and awareness among South African consumers,” they added.

NBL continued to raise awareness of King Lager’s role in the home-grown barley project. This in turn supports the local barley industry, with the ultimate goal of creating sustainable employment in Namibia. King Lager therefore remains a purpose driven initiative for NBL and, despite challenges, is committed to its long-term success.

During the year, NBL also worked with Stellenbrau and Soweto Gold on product pack renovations and format extensions that are more aligned to consumer needs. “Our own craft brand, Camelthorn, was renovated and relaunched in Namibia and South Africa in July 2017,” they said

Following the restructuring of the South African operations in December 2015, it was mutually agreed to terminate the Distribution Agreement between Diageo and NBL. With effect from 31 December 2016, NBL discontinued the manufacturing, distribution and sales of all Diageo products, including Smirnoff.

Meanwhile, NBL Finance Director, Graeme Mouton said, “The quality of NBL’s relationship with Heineken South Africa contributed to this year’s performance. While Namibian beer volumes shrunk by 3%, this decline was off-set by a 46% increase in volumes sold to Heineken South Africa. NBL therefore achieved an overall volume growth of 8%. NBL maintained an operating margin of 22% despite the challenging trading environment. Profit attributable to shareholders of N$318 million was delivered – a decrease of 14.5% on the prior year. This decrease is mainly attributable to the increase in equity accounted losses from NBL’s associate, Heineken South Africa, as a result of increased shareholding. The equity losses were further increased with the loss incurred by Heineken South Africa resulting from the restructuring of the South African operations.”

In terms of the outlook, Van der Westhuizen said, “The challenges in our operating environment highlight the importance of continually diversifying our business, product and brand portfolio, and strategy in order to stay ahead of the variables we have experienced in the past year. This includes an ongoing focus on first-time-right initiatives across the business. We are excited by the significant success of Heineken South Africa in the past year. We will continue to maximise scale efficiencies and capabilities across the two businesses in order to optimise our supply footprint in Southern Africa, as well as possible synergies in the export market.”

We will continue to leverage our portfolio of premium beers, capitalise on new opportunities in the growing craft segment, and respond to customers every changing needs,” he added.

Caption: Managing Director of Namibia Breweries Limited (NBL) – a subsidiary of the O&L Group –, Wessie van der Westhuizen (right) and NBL Financial Director, Graeme Mouton are happy with the NBL Financial Results ended 30 June 2017.

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