The East African Breweries Limited has reported a marginal reduction in net profit for the six-month period ended December 2022 hurt by increases in cost of sales after significant inflationary pressures on the cost of inputs.

In July last year, excise tax for beer and spirits in the country came to effect, increasing by 10pc and 20pc respectively.

Four months later, consumers were hit by another 6.3pc excise tax increase attributable to the annual inflationary adjustments.

EABL Group CEO Jane Karuku said this coupled with global supply chain constraints due to the Russia Ukraine war, and repressed sales due to the increase in the cost of living for customers, pushed up the cost of sales, which ate into earnings.

“EABL faced an exceptionally challenging time related to macro-economic volatility and drought situation across East Africa, global inflation, and geo-political disruptions related to the Russia/Ukraine war. This was further compounded by excise-related price increases in Kenya, effected in July and October, which significantly affected consumption of our brands,”

The listed brewer says it made Ksh 8.7 billion in net profit, which is Ksh 34 million  lower than what the company recorded during a similar period the previous year.

The company attributed the slow growth to global disruptions coupled with the emergence of illegal alcohol consumption.

As a result, EABL’s net sales growth regressed by 1pc in Kenya, which is its largest market.

“We will continue executing our strategy to navigate the prevailing macroeconomic volatility, leveraging our portfolio of extraordinary brands, smart investment, fuelled by our culture of everyday efficiency. We are also staying close to our consumers, taking advantage of our commercial capabilities and digital tools to enable us rapidly understand trends and execute with precision,” added Karuku.

The company however says effective strategies have been established to navigate the prevailing macroeconomic volatilities, and means of leveraging on the digital spheres and new technology to increase efficiencies.

Overall, EABL posted a net sales growth at 4pc to Ksh 57.3 billion while its capital expenditure was Ksh 6.7 billion. 

The board of the listed brewer has recommended an interim dividend of Ksh 3.75 per share.