EABL delivers strong earnings in difficult environment

East Africa Breweries Limited (EABL) has reported strong financial results despite facing a challenging operating environment impacted by forex depreciation and tax adjustments. The listed brewer saw net profits reach 12.3 billion shillings, showcasing resilience amidst tough market conditions. CNBC Africa recently spoke to Risper Genga Ohaga, EABL's Group CFO, to gain insights into the company's performance. Ohaga emphasized the company's commitment to running the business efficiently for the benefit of all stakeholders. She highlighted that the latest financial results marked EABL's second-highest profitability, following a stellar performance in the previous financial year. EABL's revenue remained relatively stable at 109.6 billion, reflecting the company's ability to navigate through a challenging business landscape. Despite a 20% year-on-year drop in profits, EABL managed to maintain a commendable performance, considering the external factors influencing its operations. The dip in profitability was attributed to factors such as inflation and FX deterioration, which impacted the company's bottom line. Ohaga discussed the FX challenges faced by EABL, particularly related to forex liquidity and the sourcing of foreign inputs such as ethanol, grain, and glass. To mitigate the impact of currency fluctuations, EABL has adopted strategies such as optimizing local raw material sourcing and collaborating with banks to explore hedging solutions. The company's proactive approach has enabled it to manage FX risks effectively and ensure continuity in its operations. In terms of regional performance, EABL highlighted the strong growth in its subsidiaries in Uganda and Tanzania. Uganda recorded impressive double-digit growth over the past few years, signaling a robust market presence for EABL in the region. Tanzania, although experiencing a slower growth rate this year, remains a key focus for the company, with plans to enhance its product offerings and capacity in the market. EABL's investments in new product developments, such as low ABV beer and premium spirits like tequila, reflect its strategic efforts to cater to evolving consumer preferences. The company's focus on innovation and diversification aligns with its goal of expanding market reach and responding to changing market dynamics. Looking ahead, EABL acknowledges the potential risks posed by global economic uncertainties and local fiscal pressures. Despite anticipating ongoing challenges in the near term, EABL remains resilient and optimistic about navigating through the market dynamics. Ohaga expressed caution regarding the outlook for 2024, foreseeing a continuation of the trends observed in 2023. Factors like FX pressure, rising interest rates, and consumer disposable income constraints are expected to shape the business landscape for EABL. However, the company remains agile in its approach, leveraging opportunities for growth and expansion amidst the evolving business environment in Africa. With a focus on resilience and innovation, EABL aims to navigate through the complexities of the market and sustain its strong performance in the coming years.