East African Breweries Ltd (NSE: EABL) FY20 Earnings Note
East African Breweries Ltd (NSE: EABL) announced weak performance as expected, with net revenue drop matching our expectations (-9.0% y/y to KES 74.9Bn) with 2H20 heavily impacted by the pandemic (net sales -29.0% h/h). A surprise one-off provision of KES 3.2Bn led to divergence from our expected Profit After Tax (PAT) decline of 26.3% y/y to record a drop of 39.0% y/y to KES 7.0Bn. Citing increased uncertainty in the business environment (bars were closed indefinitely in Kenya), there will be no final dividend for the year (KES 6.00 in FY19). With the performance generally in line with our expectations (adjusted for one-offs), we maintain our BUY rating at a target price of KES 201.68. However, the lack of a final dividend is a negative for investors.
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