Thursday, April 2, 2020

KBL’s poor man’s drinks support its results

Sechaba Breweries Holdings, the biggest brewer in the country, saw the foam from its clear beer bubbling up the beer swiggers’ marks during the second half of the year to power its better than expected results.

Turnover hit the P 1 billion mark to March 31, this year from P 980 million, supported by poor man’s drinks ÔÇô St. Louis and Chibuku ÔÇô for the first time in five years.

Drinkers of clear beer, especially St. Louis, were in the fast lane during the festive season pushing the volumes up 14 percent in the second half from five percent at the first six months of the year.

However, the figures did not translate into anything big when coming at profits as profit after tax remained jaded from P 222 million to P 223 million.
But they were cheered by the financial markets as analysts said they were better than expected.
“Sales revenue grew by 9.8 percent to P 1 billion, surpassing our forecast by 5.3 percent. Earnings increased by 2 percent against a decline of 7 percent for the full year of 2006,” a researcher at African Alliance Botswana, Pulafela Isaacs, said in his research note.

He said although clear beer dropped by 3 percent, it did better than last year when it slouched by 17.6 percent like-for-like.

Alphonse Ndzinge of Investec Asset Management also shared the same sentiments about the company saying that they were driven by the sales which occurred during the second half of the year.
“KBL had good results for the second half of the year. It is very clear that its restructuring plan is starting to bear some fruit,” he said, adding that he was wary about the premium brands.

“They are feeling some competition in the premium brands,” he added.

KBL suffered a set back on its premium beers when the Dutch brewing giant, Heineken, withdrew SABMillers’ rights to sell Amstel through its African subsidiaries after more than 40 years.

According to the London-based magazine, Africa Investor’s latest edition, Heineken, which has been keen to get a license back for sometime, won an arbitration ruling which found SABMIller’s 2005 purchase of BavariaÔÇöthe second largest brewer in South AmericaÔÇödetrimental to Heineken interests and allowed the company to exercise an opt-out clause over its South African products.

Amstel annual revenue were worth around US $ 300 million ÔÇô accounting for 9 percent of the Southern African market and translating into 31 percent of SABMiller’s international profits. The move will cost SABMiller in profits starting from April this year.

Further, KBL’s problems on the premium brands are complicated by Namibian Breweries through its export flagship Windhoek lager and light, which have penetrated the southern African region and are now being launched in Asia and Europe.

“Premium brands earn much higher margins than mainstream brands even though your volumes are less,” Sven Thieme, chairman of Namibian Breweries, told Africa Investor in its latest edition.
Over the last eight months Windhoek volumes more than doubled in South African market and went up threefold in Botswana, presenting a serious challenge to KBL and its new products which include the Italian brand, Peroni and the Czech Republic Pilsner Acquill.

The two new brands ÔÇô which are internationally held in high esteemÔÇö have not been properly launched in the local market. The company is expected to explain its long term strategy to analysts and journalists tomorrow (Monday).

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