Rwanda brewers stare at lower earnings as expired stocks pile

Monday May 18 2020

Bralirwa’s production line. Rwandan brewers are feeling the effects of the Covid-19 pandemic as sales continue to drop. PHOTO | FILE | NAITON MEDIA GROUP


Rwandan brewers are feeling the effects of the Covid-19 pandemic as sales continue to drop since the country went into lockdown in March.

As a result of the shutdown shocks, Bralirwa Plc, the only brewery listed on the Rwandan stock exchange, has proposed to its shareholders to suspend dividend payouts this year. This will enable the company to reserve its cash flow and keep operations running as the ongoing pandemic takes hits its revenue streams.

As of May 14 on the Rwanda Stock Exchange, there were outstanding offers of 748,600 Bralirwa Ltd shares between Rwf 138 ($0.14) - Rwf150 ($0.16) and no bids. The current share price reflects the highest and lowest gain over the last 12 months.

“Given the significant uncertainties on the extent and duration of the disruption as a result of the Covid-19 outbreak, the board is taking steps to protect our cash flow to preserve liquidity in the interest of our company, and as such proposed not to pay out any dividend on the 2019 result,” it said in a statement.

The company says its products “by definition social products, enjoyed together, there is a pause to hospitality and events because of Covid-19, and this will undoubtedly have an effect on our sales.”

This proposal will also be subject to approval during the upcoming AGM though the dates are yet to be set due the lockdown.


Although the brewer is yet to quantify the effect of the pandemic on its sales and revenues this year, the company says it will be affected.

A company statement says Bralirwa’s plan for 2020 was to further top line, profit and margin growth in the context of continued outperformance of the Rwandan economy relative to the broader African region driven by new product introductions, cost management and further debt reduction.

“However, the outbreak of Covid-19 represents an unprecedented health crisis and macro-economic risk, which is likely to have a significant impact on the economy and our business in the near term,” said Merid Demissie, vice chairman of the board and managing director of Bralirwa.

The brewer was coming off a bullish year, having recorded a 5.4 per cent growth in total volumes, and a 1.8 per cent growth in revenues, to a tune of Rwf 101billion ($107.3 milion) last year, compared to Rwf 99billion ($105 million) recorded in 2018.

Beer volume grew by single digit, mainly driven by strong performance of its flagship brands of Primus, Mutzig and Amstel.

During the lockdown, both Bralirwa and Skol breweries -- the two leading brewers -- suffered reduced sales, as all bars, shops and hotels were closed, as part of government efforts to control the coronavirus spread.

Skol alone supplies up to 3,500 bars and retail points around the country, and sales in all these have been at a standstill since March.

Even when government recently eased the lockdown, where bars and restaurants can operate up to 7pm, many bars and hotels have not yet resumed selling alcoholic drinks.

Many bars, hotels and depots have already incurred losses, after thousands of beer bottles from Skol and Bralirwa expired.

“A lot of the beer we had stocked has expired; we have made losses. Skol recently promised to meet with us and see what they can do to help,” said Faustin Habumugisha, a bar owner at Kisimenti.

He said that during the lockdown they have made a loss of between Rwf3 to 4 million, which is the case with many other bars.

Dealers have faced the brunt of the lockdown because on top of not selling beers to bars and hotels since March, they have had to pay rent and also suffer losses due to expired beers.

Some resorted to selling beers to supermarkets and small boutiques, while many are still closed.

“These are exceptional times and therefore we are in close contact with our customers and suppliers to listen to their concerns about the immediate impact of Covid-19 on their businesses and to support where possible,” said Batamuliza.

According to the latest results, Bralirwa also registered a decline in soft drink volumes, which decreased by a mid-single digit due to the price increase on RGB 30cl and 50cl in 2018 and only started to recover half way through 2019.

Capital expenditure in 2019 dropped to Rwf12.6billion ($13million) from Rwf15.4 billion ($16 million) in 2018.