Zambrews half year earnings triple as 2017 trading conditions improve

LUSAKA Stock Exchange listed clear beer manufacturer Zambian Breweries Plc had a strong half year ending 30 September, posting a triple earnings number of ZMW198million compared to ZMW62.5million a year ago exactly. This represented a 218% rise in earnings. Drivers of this stellar performance were exchange rate gains due to a more stable exchange rate environment compared to previous periods volatility. The company’s revenues slid a marginal 3% driven by a decline in production volumes at 1.151HL but was cushioned by stability in the dollar – kwacha exchange rate which realized a ZMW7million in exchange rate gains versus a ZMW49million loss a year ago exactly. A further contributor was decline in borrowing costs than thinned the company’s interest cost line as a result of the benchmark lending rate cuts by Bank of Zambia in the year. The beer manufacturer asset size also grew by 23% funded by shareholder’s funds following capital injections in the period half year period.

Trading conditions were generally less turbulent compared to 2015/2016 financial year that was characterized by high interest and exchange rate volatility impacting stability of earnings. The half year to September 2017 saw soft drink volumes slide by 34% on the back of competition from new softies on the market. However, this was offset completely by a rise in beer volumes by a quantum of 8.3% – key driver of the rally being eagle lager a domestic low cost brand and castle lite a premium brand in the international segment. Zambrews market share slid to 93% following the sale of the Miller brand to its competition. However, the company aims to recoup the lost share through penetration of the international market with its local brands such as Mosi Lager.

As at close of business on 29 December ZAMBREW stocks traded for ZMW6.84 a share on Zambia’s bourse the Lusaka Stock Exchange – LuSE.