National Breweries Plc announced on 5th June that its earnings per share (EPS) was expected to be 3725% lower that than the previous financial year due to multiple economic and competitive headwinds.
The purchasing manager’s index (PMI) dipped further on 6th of June to 43.9, well below the 50 mark which is indicative of contraction pressures being experienced by industry. The PMI score for Zambia spent the bulk of 2018 below 50 which coincides with the financial year that Natbrew was reporting its weakened performance.
“In accordance with the Lusaka Securities Exchange (“LuSE”) Listings Requirements, the Board of Directors of National Breweries Plc (“Natbrew” or “the Company”) hereby advises the Shareholders of the Company that the Earnings per Share for the fifteen-month period ended 31 March 2019 is expected to be 3725% lower than the corresponding period last year for the company”, read the statement issued by Vongai Chiwaridzo who is the company secretary of the company on SENS published on 5th June.
Vongai’s statement indicates the company experienced headwinds during the reporting period. “The company faced headwinds in the period under review. Margins were eroded due to high cost increases of imported packaging materials emanating from currency depreciation”, further read the issued statement. The ZMW has weakened by approximately 26% since August 2018 according to Bloomberg’s currency charts. Furthermore, domestically the company has had to grapple with inflationary pressures that have saw the inflation rate lurk just below the Central Bank’s targeted upper boundary of 8%.
Competition from other players appears to also have been rife with other bulk suppliers as well as substitutes that eroded value for the company. “In addition, the business faced increased competition from bulk beer players and unregulated cheap spirits”, according to the issued statement.