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VENTURES AFRICA – East African Breweries Limited (EABL) has shut down operations at its Nairobi plant as well as reduce working days at Ruaraka plant from 7 to 5 days, in a bid to cut down on its overall operating cost.
“The reduction in the number of working days is one of the measures to ensure we do not expend more money than we need in our operations,” said Tracey Barnes, the company’s Group Finance Director.
To further save cost, Tracey added that wastages will be reduced during the course of brewing, packaging and logistics because the company could not afford to “stand still” in the second half of the year.
Despite posting a 5.1 percent increase in net income, the Kenyan-based company had experienced a drop in the sales of its Senator Keg beer, a regular top seller, as a result of the excise duty imposed on the beer.
Keg beer had initially been excluded from tax duties but now attracts a 50% tax rate, forcing EABL to shoot the price up from Sh30 ($0.34) to Sh50 ($0.57) for a 30cl tumbler and Sh50 ($0.57) to Sh80 ($0.93) for a half-litre mug, according to Business Daily.
Since the beer is targeted at low-end consumers, the increase in price triggered an 85 percent drop in sales volume.
However, in a statement given by the brewing company on Friday, net income was valued at Sh3.95 billion ($45.7 million) in the six months through to December compared to last year’s Sh3.76 billion ($43.5 million).
Even with the declaration of an interim dividend of Sh1.50 per share, EABL’s share price on the Nairobi bourse has experienced a 22.3% slide from January till now, dropping from Sh300 ($3.5) to Sh233 ($2.7) as at today.