East African Breweries Limited (EABL) has announced that its profits for the full year ended June 2013 will fall by more than 25 per cent as compared to the previous year.
The surprise announcement comes five months after the brewer said that Devlin Hainsworth, the group’s former managing director was stepping down, barely eight months after he joined the brewer.
Charles Ireland, who had been the managing director of Guiness Anchor Berhad, a joint venture between Diageo—EABL’s majority owner—and Asia Pacific Breweries, Malaysia’s third largest consumer goods business which is listed on the Malaysian Stock Exchange, was appointed managing director from April 1.
“EABL projects that net earnings for the year ended June 30, 2013, will be more than 25 per cent lower than reported for the previous period primarily due to two factors reported in the previous year’s results,” it said in a statement released on Tuesday.
The brewer said that the drop in the full year results was blamed on the effect of the sale of a 20 per cent shareholding in Tanzania Breweries for a net consideration of Ksh3.64 billion ($43.1 million) which was included in its results for the period ended June 2012 but will not be there this year.
In addition, the brewer said that net finance costs for the ended June 2013 is significantly higher compared to the previous period because of a Ksh19.5 billion loan taken in November 2011 to enable it to buy back a 20 per cent shareholding in Kenya Breweries Limited from SABMiller.
It said that interest charges for the year ended June this year cover a full twelve months compared to only seven months for the year ended June 2012.
The brewer however said that it expects to report a growth in net sales for the year ended June 2013 compared to the same period ended June 2012, an indication that its sales have however been on an upward trend.
Its shares, which have gained 31.7 per cent this year closed at Ksh349 ($4) on Tuesday compared to Ksh265 ($3.08), the opening price at the start of this year.
In February this year, EABL posted a 14 per cent drop in half year net profits to Ksh3.75 billion ($43.6 million) compared with Ksh4.98 billion ($57.9 million) recorded during the same period in 2011 even though revenues shot up 10 per cent to Ksh30.6 billion ($348.8 million).