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Namibia consumes more beer than it exports

Mon, 28 September 2015 23:19
by Donald Matthys

Namibians continue to remain the strongest contributors to total revenues and earnings for Namibia Breweries Limited (NBL) with 40 litres per capita consumed, the NBL has revealed. 

According to their latest financial results, Tafel Lager is the main driver of the overall beer growth, with locals contributing N$490 m through local procurements.

The beer giant says Namibians consumed more beer than all the other 17 countries it exports NBL beverages to, including beer. The NBL paid N$139m in rates and taxes to government, with additional taxes collected on behalf of government in the amount of N$975m.

Despite NBL exports to Angola, Australia, Cameroon, China, Germany, Kenya, Lesotho, Namibia consumes more beer than it exports Mauritius, Mozambique, South Africa, St. Helena, Swaziland, Tanzania, Uganda, the United Kingdom, Zambia and Zimbabwe, Namibia was its biggest beer consumer.

The breweries expect the alcohol consumption to continue in Namibia at its current pace, despite the expected increase in the local competitor environment. However, total beer volumes sold to export markets declined, compared to the prior year.

Meanwhile, Tanzania showed good growth, whereas sales in Zambia, Botswana and Mozambique had decreased, with alcohol levies continuing to put pressure on volumes in Zambia and Botswana.

Profit grew by 26% to N$258 million from N$205 million the previous year. Revenues grew to N$2.43 billion from N$2.31 billion last year. The growth in revenue is 5%, compared to the previous year.

The company’s operating profit for the year grew 12% compared to the previous year, which was before equity losses and interest.

“The NBL exceeded all expectations, despite increased competitor activities, market forecasts and volume migration to South Africa. Even though we are extremely proud of our financial performance for the financial year 2015, we remain focussed on the job at hand and are working relentlessly towards executing our long-term goals and objectives in order to achieve our F19 ambitions,” said Hendrik van der Westhuizen, NBL managing director.

Meanwhile, the NBL vows to continue exploring investment opportunities in promising markets, and believe that their investment in South Africa will increase overall profits derived from that market.

“We are extremely optimistic with what the future holds for the NBL, and the new joint venture structure in South Africa. The conclusion of the joint venture is subject to approval from the Competition Commission. However, we are confident that once approval is received, both the NBL and Heineken will greatly benefit from the opportunities which exist in the South African market. We have full confidence in our longterm strategic plan, and as such the NBL is well on track to execute and achieve its F19 ambitions,” Van der Westhuizen reiterated.

The South African joint venture DHN experienced an increase in its overall volumes. Its operating loss increased, compared to the prior year.

However, taking into account royalties and production margins, the NBL continued to make positive returns from the operations of their South African business. The loss from continuing operations recorded from the South African joint venture DHN was N$124.5m, which is N$4.5m higher than the previous year.

“The NBL continued its strong performance in the local market. Namibian beer volumes experienced single-digit growth, while the soft drinks’ and ready-todrink (RTD) category experienced double-digit growth, compared to the previous year. DHN experienced a marginal increase in losses, compared to the prior year. However, taken together with royalties and production margins, the RSA continues to make positive returns from ongoing operations,” Graeme Mouton, NBL’s Finance Director added.

The total estimated investment required is N$610 million, which will be financed out of operations and by way of a medium-term loan to the amount of N$200 million.

Meanwhile, Simonis Storm Securities (SSS) said it is hard to see commodity prices falling further, bringing an end to this windfall. The weakening Namibian Dollar and operational cost pressures are likely to put future earnings’ growth under pressure.

However, SSS feels that working capital has been managed well this year, resulting in improved operating cash flows, suggesting that management knows what they are doing.

Personnel, administration and marketing costs increased well above the inflation rate, which is a concern, James Cumming, Director of Research at SSS, said.

“On the other hand, transport costs were in line with last year, despite increased beer volumes produced. We suspect this was due to savings made from falling fuel prices, and it is hard to see fuel prices falling further,” Cumming added.