TBL | Capacity constrained
Tanzania Breweries Limited (TBL) grew EPS by 14% y/y during the six-month period to Jun'19. However, we note failure to proceed with the new Dodomo brewery will limit the Group's ability to execute its affordability strategy and constrain future volume and earnings growth.We estimate TBL is currently operating at c.90% utilisation, limiting scope for volume growth. Positively, the high utilisation together with a reduction in headcount (c.10%) resulted in a 28% y/y increase in operating profit. Despite a mixed set of results, we believe that if TBL confirms the new brewery, the Group is poised for growth. The Group's affordability drive will unlock double digit volume growth in our view, growing earnings at a CAGR of 21% over the next three years.
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