Namibia Breweries Revenue Flat in 2014 (

NAMIBIA Breweries’ revenue remained broadly flat for the period ended 31 December 2014 compared to the previous period. The group´s operating profit (before equity losses) for the period grew 6% compared to the previous period.
The company said on Friday that although Namibian beer volumes grew, volumes produced and sold to export markets and its joint venture in South Africa, DHN Drinks were down compared to the previous period.
Profit after tax decreased by 25% which is mainly due to the increase in the equity loss from DHN Drinks.
On the local market, Namibian beer sales have continued to grow and increased by 5% year-on-year. This was mainly driven by Tafel Lager and Windhoek Draught.
“Significant investment was made in the Windhoek brand during the period under review. Windhoek Draught continues to perform well and has also contributed to the overall growth in volumes. Volumes continue to migrate from Windhoek Lager to Tafel Lager and Windhoek Draught and this portfolio shift was achieved without losing overall market share,” Namibia Breweries said.
The company said DHN Drinks continued to grow volumes in a competitive beer market despite difficult trading conditions.
“Due to timing differences relating to marketing and operational spend the operating loss attributable to DHN increased compared to the previous year,” the company said.
Commenting on exports excluding South Africa, the company said performance in export markets was fairly mixed. Competition has increased particularly in the key SADC countries, it said.
“Our brands continue to grow in Tanzania and Zambia. Our rate of sale in Mozambique has slowed down and has been hampered by brand competition challenges. Growth in Botswana has been impacted by the increase in the alcohol levy,” the company said.
Namibia Breweries said it remains positive that the second half of the financial year will deliver further volume growth.
Maintaining margins will remain a key focus point going forward and the company said it is confident that it will meet the challenges over the coming months.
The board declared an interim dividend of 37 cents per ordinary share.
“We currently have a hold recommendation on Namibia Breweries and looking forward we remain concerned about the Namibia Breweries business, as we expect the increased competition in the local market to drive margin compression and sales volume reductions for the business.
Additionally, the losses experienced within the joint venture is concerning. However, we will update our forecasts and target price following discussions with management and further analysis,” IJG Securities said in its comment on the results.
Source: Business