East African Breweries Ltd (NSE: EABL) FY18 Earnings Note
Mainstream beers and spirits continue to perform while the Tanzania business is on stellar growth trajectory, though the 41% y/y net sale value (NSV) growth is unsustainable. A KES 2.0Bn provision for taxes, whose details management flatly declined to discuss, was the primer to the 15.0% y/y drop in bottom-line performance.
1) Re-emergence of bottled beer posts the best sales for a typically weaker second half (Jan – June) period
2) Mainstream spirits shine. Spirits’ consumption grew 18% in 2H18 from flat growth in 1H18 as economic recovery in Kenya gathered steam
3) Tanzania market recovery, 41% y/y in net sales value. Growth in Tanzania hinged on relaunch of the legacy Serengeti brand under Serengeti Lite brand and Smirnoff under Smirnoff Xtra Pure and Xtra Smooth
4) Taxman’s KES 2Bn one-off tax punch
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