Namibia Breweries Limited announced a 23.6% profit increase in its integrated annual report for the financial year ending in June 2018. The company managed a profit increase in spite of lower sales of the beer market in Namibia, attributed to a significantly “muted” consumer demand.
Namibia Breweries Limited (NBL) – the leading beer manufacturer in Namibia – announced its latest financial results to shareholders, in a meeting in the Namibian Stock Exchange, in Windhoek. The report highlighted the company achieved a 23.6% increase on profit after taxes over the result of 2017. This meant that shareholders dividends amount to NAD397.7 million ($27.8 million). The company was able to increase profit despite the tough trading environment for the beer market in Namibia, reflected in NBL’s beer sales in the country, which represent over 63% of its total volume of sales.
Representatives from the company stressed the “muted” consumer demand to justify the worse sales results and said that “the business experienced muted consumer demand with pressure on disposal income contributing to a pervasive discount culture in the Namibian trade,”. However, turnover was down by less than 1% when compared to 2017, even though 2018 marked the biggest contraction in demand in the domestic beer market in Namibia, in the past four years. Since 2014, NBL’s sales saw sales increase at an average of 5.6% a year.
The significant change over the company’s performance in 2017 came from the results brought by its associates. In 2017, NBL had absorbed an operating loss of NAD155.7 million ($10.8 million) from its associate Heineken South Africa (HSA). Although HSA still had a negative impact of NBL in the present year, this was reduced to NAD33.4 ($2.3 million). NBL explained that demand remained strong in South Africa and that, unlike last year, volumes higher than the minimum contracted were delivered to the Sedibeng brewery in Johannesburg. the performance out of South Africa dictated the company will now focus on continuing to grow volumes in that country, in partnership with Heineken.
NBL Geographic Footprint. Source: Namibian Breweries Limited
Additionally, NBL has announced its intentions in expanding to new markets, stating that it would prefer to do so in the framework of the current arrangement with Heineken under which the two companies combine their growing portfolios under one umbrella. NBL has not disclosed, however, which markets are currently under consideration for its expansion. For the past decade, NBL has grown its presence beyond Namibia and South Africa, namely in Zambia, Botswana, Kenya, Tanzania and Zimbabwe.
