Natbrew half year loss widens as illegal Opaque beer market intensifies
• The opaque beer market has seen the mushrooming of unlicensed brewers of traditional beer and homemade spirits
• Natbrew took some impairments from the close out of unprofitable segments
LUSAKA Stock exchange listed opaque beer manufacturer National Breweries Plc’s half year loss to 30 September 2017, widened by 65% to ZMW20million as the company grappled with competition from illegal opaque beer manufactures in the country. The opaque beer market has seen the mushrooming of unlicensed brewers of traditional beer and homemade spirits. Natbrews production volumes shrunk 37% to 519Hls from 820Hls same time a year ago exactly. This translated to a 28% slump in beer sales for revenue to ZMW142.15million. Despite improved fundamentals such as reduced borrowing costs from an easing monetary policy by the Bank of Zambia in 2017, the company’s market share has continued to erode from competition from illegal bulk traditional beer.
The company also took impairment losses from a previous year’s business restructure where it took a strategic decision to close out unprofitable segments to minimize its cost structure. This cost the company ZMW8.2million on its impairment lines. Operational loss narrowed to ZMW4.4million a 72% improvement from ZMW15.75million a year ago.
National Breweries is in the middle of an equity transaction where Heinrich’s Syndicate Limited’s subsidiary Anheuser – Busch InBev SA INV(NYSE:BUD) is in talks to sell its stake in Natbrew to Delta of Zimbabwe an Opaque beer company seeking to regionalize its operations in Southern Africa. A cautionary statement was issued to shareholders to exercise caution in trading in light of the implications this deal would have on stock value.
As at close of business on 29 December NATBREW stocks were trading for ZMW12.50 a share on Zambia’s bourse the Lusaka Stock Exchange – LuSE.
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