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Breweries thrives on 25% jump in after-tax profit as slower beer sales affected revenue by 0.8%

Breweries thrives on 25% jump in after-tax profit as slower beer sales affected revenue by 0.8%

Despite the challenging economic landscape, for the financial year ended 30 June 2018, Namibia Breweries Limited (NBL) recorded a healthy profit of N$398 million after tax, an increase of 25% on the prior year.

The demand from South Africa remained strong and higher volumes than the minimum contracted were delivered to Sedibeng Brewery in Johannesburg. However, locally the company experienced muted consumer demand with pressure on disposable income contributing to a pervasive discount culture in the Namibian trade resulting in a 5.5% decrease in sales volumes. This drove down revenue by 0.8% to N$2.6 billion.

Speaking at the announcement of the financial results, NBL’s Finance Director, Graeme Mouton said while Namibian beer volumes decreased by 2%, the company’s investment into Heineken South Africa continued to contribute to its performance during the financial year. A total of N$96 million (2017: N$ 94 million) was earned in royalties from Heineken South Africa.

Financial analysts from PSG Konsult Namibia are of the view that the Breweries’ profit of N$398 million was achieved through a combination of well-managed operating expenses, higher finance income and lower financing costs as well as a significant decrease in the loss from an associate.

Expecting investors to be happy about the dividends, PSG said that the special dividend drives up the dividend yield to 6.3% at the current share price. The NBL board declared a final dividend of 46 cents on 4 September, which represents an increase of 9.5% from the previous period.

There will also be a collective sigh of relief as the losses in SA looks to have been stemmed and the company is generating cash through Heineken and the royalties,” PSG added.

The Managing Director of NBL, Wessie van der Westhuizen stressed that to further diversify and grow the company’s volumes, they plan to continue developing brands and creating new beverage experiences.

Our focus in the short term will be to further grow volumes in South Africa through Heineken South Africa, while exploring longer-term opportunities to establish the footprint in other African markets. We will continue to develop breakthrough campaigns to further promote our brands. We will continue to explore additional opportunities to further manage costs down. This requires a breakthrough approach and emphasises the importance to create a riskfree environment where employees are free to further contribute to the success of the business,” van der Westhuizen added.

Meanwhile, during the course of the year, the company relaunched and positioned Camelthorn in Namibia and South Africa as its authentic, small-batch craft beer brand, and incorporated Urbock into this range. The seasonal, dark malted beer has found a perfect place alongside the Weiss and Helles Camelthorn beers.

Caption: Namibia Breweries Limited, the leading subsidiary of the Ohlthaver & List Group, presented its 2018 financial results on Friday, 14 September. The results were presented by Managing Director, Wessie van der Westhuizen (right), and Finance Director, Graeme Mouton.

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