EABL has announced a Ksh12.2 billion full-year profit after tax, marking a 12 percent increase from the previous year. Group CFO Risper Genga Ohaga speaks to CFO East Africa about the strategies at play.
EABL has attributed the 12 percent growth in its profit to strong operational performance, forex gains of Ksh313 million, and a nearly 30 percent drop in finance costs. The company has also declared a final dividend of KSh5.50 per share, bringing its total dividend payout for the year to Ksh8.00 per share.
According to group CFO Risper Genga Ohaga, the results reflect a deliberate effort to build financial resilience in a volatile macroeconomic environment. She points to the group’s ongoing efforts to de-risk the balance sheet following two years of sharp fluctuations in interest rates and currency depreciation. In her assessment, the past two years have been an exercise in creating breathing room for the income statement, while strengthening the foundations of the wider business.
“Currency and interest rate volatility have featured in our results over the last two years as we saw wide swings in the Kenya shilling as well as in interest rates. Regarding interest rates, we have paid down our loans by Ksh20 billion over the last two years, giving our balance sheet much needed stability and reducing volatility in our income statement. We have also increased the proportion of fixed rate to floating rate debt and continue to consider opportunities to further optimise funding costs and reduce volatility. On currency, we have seen much more stability in the Kenya shilling, and we see this as being less volatile than we have experienced in the last two years,” she says.
As Risper reveals, strong cash generation and cash conservation made the debt reduction possible. The business generated Ksh70 billion in cash from operations over the past two years, giving it room to reduce debt, complete large capital projects and pivot to balance sheet protection.
“The strong cash flows generated enabled us to pay down debt by Ksh20 billion over the last two years. We also prioritised capex as we had completed major capex projects, reducing capex spend to five percent of net sales value, down from 13 percent two years ago when we had major capex projects to complete,” she explains.
Strong performance
Despite the cost reduction efforts, the company’s headline growth was modest. Revenue rose four percent while volumes grew by two percent. Operating expenses, on the other hand, increased by 18 percent. Risper explains that the strengthening of the Kenyan shilling against regional currencies had a significant impact on reported revenue, masking what was actually 10 percent organic growth.
“On the income side, it is important to note that while reported growth is four percent, organic growth came in at 10 percent, the difference being due to the strengthening of the Kenya shilling against regional currencies. We are proud of the growth as well as the positive gearing. On the expenses side, we had large one-offs related to certain tax provisions across the region, which if excluded, would show underlying expense growth of only four percent. This shows that our underlying performance is really strong,” she says.
Beyond the numbers, the industry is also navigating a shifting consumer and policy landscape. A recent Euromonitor report commissioned by the Alcoholic Beverages Association of Kenya estimates that illicit alcohol now makes up about 60 percent of the local market. Risper notes that the company remains focused on its strategy, remaining close to consumers and ensuring that its products are the first choice for consumers across the board. This has helped EABL navigate the growing pressure on legitimate players.
“Our strategy is focused on four key pillars: vibrant beer, premiumisation, winning in mainstream and shaping new frontiers. These are driven by deep consumer insight that enables us to cater to all consumer cohorts and tastes. Having said that, combating illicit alcohol relies heavily on enforcement measures that support legitimate businesses and protect consumers. The focus on embedding sustainability into everything we do, from sourcing and production to partnerships and community engagement, remains unchanged,” she says.
At the same time, the National Authority for the Campaign Against Alcohol and Drug Abuse’s proposed restrictions on the sale and consumption of alcohol have raised fresh concerns for the industry. If adopted, the policy would introduce restrictions on the advertising and sale of alcohol and raise the minimum age of alcohol consumption from 18 to 21. EABL is taking a cautious but proactive approach to these developments.
“The proposed regulations are at a very early stage and we are reviewing and engaging with the relevant parties,” Risper says.
