Hostile operating environment undermines Sechaba profitability
Isaac Pinielo | Monday July 6, 2015 16:35
Announcing the 2015 full-year results on Friday, Kgalagadi Breweries Limited (KBL) Managing Director, Johan De Kok said for the first time the alcohol levy is now higher than the official excise cost as it stood at P183.3 million as at December 2014.
De Kok also indicated that another increase in the levy is anticipated during the current financial year and that consultation and engagement with government is on-going.
The group recorded gross profit of P830,152 in 2015 compared to P855,960 in 2014, which is a 3.0 percent decline.
Profit before tax also fell by 5.8 percent from P435,597 in 2014 to P410,124 in 2015. Operating profit fell by 4.1 percent from P440,859 in 2014 to P422,700 in 2015.
Profit after tax fell by 8.1 percent from P350,551 to P322,272. Turnover increased by 9.4 percent from P1,861,571 in 2014 to P2.036,531 in 2015.
Total dividends declared dropped by 1.0 percent from 101 thebe per share to 100 thebe per share. However, KBL’s total volumes were up by 4.9 percent on prior year. According to De Kok, clear beer total sales volumes were up by 4.8 percent with Carling Black Label continuing its dominance and the brand contributing over half of the category. Its sales volumes were up by 22 percent on prior year.
St Louis lager declined by 1.0 percent indicating signs of stabilisation. Castle Lite declined 12 percent for the year while Global Brand Miller Genuine Draft grew 24 percent on prior year.
He also stated that the growth of the returnable bulk packs at the expense of cans and non-returnable bottle packs had a negative impact on margins.
“Alcoholic Flavoured Beverages (AFB)’s significant growth of 831 percent on growth and category expansion of Core, Redds and Flying Fish,” said De Kok.
On the performance of non-alcoholic beverage, he said Sparkling Soft drinks finished 12 percent above prior year notwithstanding increased competition of Brands.
Growth of two-litre pack was biggest contributor in this category. He said can volumes declined by 21.3 percent, which impacted Sparkling Soft Drinks Margins severely. The Coke Brand was up by 20 percent on prior year. Total Non-Alcoholic Beverages ended 15.6 percent ahead of prior year attributed to strong growth of Source Water which recorded 23 percent, Mageu 9.5 percent and the introduction of Mazoe during the year.