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Tough export market, declining consumer spend result in 3% revenue slump for breweries

Tough export market, declining consumer spend result in 3% revenue slump for breweries

Namibia Breweries Limited (NBL) maintained a strong market position despite having faced challenges in the export market and declined consumer spend which resulted in a 3% decrease in revenue amid a strained local economy.

The breweries this week announced its financial results for the six months ended December 2017, stating that the Namibian, South African and export volumes decreased by 1.8%, 22.9% and 1.8% respectively.

This in turn resulted in the overall beer volumes and revenue decreasing by 7.7% and 3%. Furthermore, the operating profit was 5.8% higher than the comparative period due to a decrease in operating expenses resulting from improved efficiencies.

“Our half-year 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 creating opportunities to bring our purpose to life. Without this, NBL would have delivered a very different result,” NBL Managing Director (MD), Wessie van der Westhuizen said.

However, despite the decline in beer volumes, NBL said it enjoys a majority market share in Namibia. NBL’s own craft brand, Camelthorn, was renovated and relaunched in July 2017 thereby accessing the growing craft beer segment in both South Africa and Namibia. Innovation in this category is specifically aimed at growing the craft beer segment, and responding to consumers’ ever-changing needs.

NBL also launched the Strongbow cider brand in Namibia, thereby entering the cider market and further diversifying its product portfolio. Successfully collaborated with Heineken Africa in the development, trial and production of Amstel Radler, which is a new product for the South African Market.

“With the changing operating environment, it is continually becoming important to diversify our business, product and brand portfolio in an effort to remain competitive, while at the same time remaining focused on our core business. Specific focus will be to drive operational efficiencies in order to maintain sustainable growth and retain healthy margins in the local market. NBL will also continue to further explore investment opportunities in promising markets and believes that our investment in South Africa will increase our overall profit derived from that market,” Van der Westhuizen said.

Meanwhile, in compliance with the Namibian Stock Exchange Listing Requirements, NBL shareholders are advised that the Group’s profit after tax and earnings per share for the period ended 31 December 2017 is expected to increase substantially by between 145% and 155% compared to the previous period.

The aforesaid is as a result of NBL’s investment in Heineken SA delivering an exceptional performance, with growth in volume and operating profit for the period, ahead of the original business case.

Caption: Managing Director of Namibia Breweries Limited (NBL) – a subsidiary of the Ohlthaver & List (O&L) Group – Wessie van der Westhuizen (right) and NBL Finance Director, Graeme Mouton at the announcement of the NBL financial results for the six months ended 31 December 2017.

About The Author

Donald Matthys

Donald Matthys has been part of the media fraternity since 2015. He has been working at the Namibia Economist for the past three years mainly covering business, tourism and agriculture. Donald occasionally refers to himself as a theatre maker and has staged two theatre plays so far. Follow him on twitter at @zuleitmatthys