By AGENCIESEAST African Breweries Ltd (EABL) will focus on cutting costs this year by growing raw materials locally and moving production of some brands to the markets where they are sold, its chief executive said on Friday.
Soaring costs of sales are spoiling the party for the Diageo-controlled brewer, which has a commanding lead in one of the world's fastest growing alcohol markets, out-selling rivals in both beer and spirits.EABL, which makes Tusker beer and sells Johnnie Walker whisky, said costs rose 26 percent during its full year ended June, outpacing a 24 percent jump in revenue to 55.5 billion shillings.Chief Executive Devlin Hainsworth said the company was already growing sorghum in Tanzania to cut raw material costs, adding that the programme will be rolled out further, along with decentralisation of brewing from Kenya.
"We need to be crystal clear what we are making where and therefore, what opportunities are there to be able to save some of the transportation costs so it (cost-cutting) is very much in focus," Hainsworth told reporters.
The company has already started manufacturing brands like Tusker in Tanzania, which was previously served by its brewery in Nairobi. EABL sells its products in Uganda, Rwanda, Burundi, South Sudan and eastern Democratic Republic of Congo.
The markets were buoyant with Uganda and Tanzania recording growth of 38 percent and 76 percent, respectively, while the Great Lakes markets of Rwanda, Burundi and eastern Congo grew by 30 percent.
Pretax profit rose 24 percent to 15.25 billion shillings and the company maintained its dividend for the year at 8.75 shillings per share, meaning a dividend yield of 4 percent against a market average of 5-7 percent.
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