EABL Tanzania growth to beat Kenya, Uganda

Annual growth rate. Over the same period, the compounded annual growth rate for the Ugandan and Kenyan operations is projected to be 9.4 per cent and 10.9 per cent respectively.

Tanzania’s contribution to East African Breweries Limited’s revenue is expected to outpace that of Kenya and Uganda in the next three years, research analysts at Kestrel Capital have projected.

In an investors’ note released Wednesday, Kestrel Capital projected that EABL’s Tanzania operations will expand at a 15.1 per cent compounded annual growth rate (CAGR) in the next three years.

Over the same period, the CAGR for the Ugandan and Kenyan operations is projected to be 9.4 per cent and 10.9 per cent, respectively. The Kenyan operation is however still expected to maintain its position as EABL’s biggest business, accounting for more than two-thirds of total revenue.

“We expect to see Tanzania sales grow at 17.2 per cent year-on-year in 2014 and 2015 driven by improving volume growth and additional market share,” says the Kestrel Capital report.
The Tanzanian operation is also expected to yield higher profit margins for EABL in this period helped by use of locally produced raw materials and manufacture of premium brands of the brewer in the country.

Income statements
EABL income statements show that contribution of the Tanzanian operation in the combined profits from operations was in the negative at -4.9 per cent and -2.2 per cent in 2011 and 2012 financial years, respectively.

The yields
The Tanzanian operation is also expected to yield higher profit margins for EABL in this period helped by use of locally produced raw materials and manufacture of premium brands of the brewer in the country.

The brewer’s profit stood at Kshs12.4 billion in 2011 and Kshs18.6 billion in 2012 for the three markets combined. Kenya’s total revenue contribution to the group is expected to drop to 66.6 per cent in 2015 forecasts from 68.8 per cent in 2012 as announced as Tanzania’s business matures.