Breweries overall volumes increase by 8.7% despite slump in local consumption
Namibia Breweries Limited’s (NBL), a subsidiary of the Ohlthaver & List Group saw overall volumes increase by 8.7% on the back of excellent growth in volumes of Heineken South Africa.
According to a statement from NBL, local volumes remained under pressure in a subdued economy, with significantly reduced consumer spending on the back of rising prices for basic goods and services, higher interest rates, a 6.9% increase in inflation, and a 22% increase in fuel prices.
South African beer volumes returned to pre-COVID levels, with production volumes in South Africa increasing by 48.9%. Tanzania remains NBL’s biggest export market and although export volumes declined by 44.4%, the revenue contribution from these markets benefited from favourable exchange rates. Distributors in several of our export markets experienced economic pressures, while some of the anticipated revenue opportunities from recently entered markets did not materialise as expected.
According to NBL, half-year revenue increased by 20.6% to N$2 389 million on the back of strong demand from South Africa, which also contributed to a 29.9% increase in royalty income.
NBL experienced significant cost pressures, which included a 25% increase in the cost of glass and a 34% increase in the cost of malt. Combined with higher advertising and promotional spending, this resulted in a 0.3% increase in operating profit to N$359 million. No interim dividend was declared by the conditions of the Heineken Transaction.
As part of the Heineken Transaction, the NBL said the special dividend payment of N$26.35 will be paid to
shareholders when the disposal of the investment in Heineken SA becomes unconditional.
NBL received dispensation from the NSX to publish conditional dividend declaration data in anticipation of the disposal becoming unconditional. A finalisation announcement will be made once the outstanding Conditions Precedent to the disposal has been fulfilled or, if applicable, waived and the disposal has become unconditional. Subject to the disposal becoming unconditional, holders of ordinary shares will be entitled to the Special Dividend, with the Last day to Trade being 30 March 2023, and the payment date being 14 April 2023.
NBL Managing Director, Marco Wenk said, “Namibian beer volumes decreased by 3.5% on the back of lower consumer disposable income and overall tough economic conditions. Operating profit remained consistent with the prior year, showing a 0.3% increase. This is attributed to our continued drive for cost-effective sourcing, overall business cost management, flexible route-to- market and ongoing and innovative sales and consumer engagement initiatives, which ensured resilient and improved earnings under continuous challenging market conditions.”
“Our Windhoek Draught brand continued to grow and had a wide reach and strong consumer
engagement to counteract competitor brands as well as categories beyond beer. Given our strong and diverse brand portfolio, strong route to market and pricing strategy, as well as world-class execution, NBL is well positioned to defend and grow its market share while capitalizing on any future growth opportunities,” he said.
Meanwhile, in terms of brands, Windhoek Draught pushed ahead as Namibia’s leading beer brand, outperforming other brands in volume growth.
“NBL’s performance for the first half of the 2023 financial year showed a slight improvement of the comparative period, despite an extremely challenging business environment. Beer volumes in Namibia declined on the back of tough economic conditions with consumers spending less of their disposable income on discretionary spending.
Overall margins percentages were lower due to the significant increase in South African volumes, which affected the mix of products sold. Heineken South Africa volumes returned to pre-COVID levels, which supported fixed cost absorption and a 29.9% increase in royalty income for the period,” NBL Finance Director, Waldemar von Lieres.
Looking forward Wenk said the next months will see a significant yet exciting change for NBL and its people.
“A detailed integration planning process, driven by Heineken, will see the business capitalising on opportunities presented by an expanded portfolio of brands, business synergies, and overall global know-how to ensure a strong focus on optimization, driving a combined supply chain, as well as the implementation of systems and processes to ensure efficiency and overall compliance,” Wenk concluded.