Zambian Breweries’ beer volumes grow by 9% in 2019 FY
Beverage, Zambian Breweries

Zambian Breweries has recorded a 9% growth in total beer volume, thanks to one of its flagship ‘pints’, for the financial year 2019 which the company describes as one of the toughest years it has had to operate in, according to a SENS statement from the company.

Our total beer volumes grew by 9% against prior year and in line with budget, with a positive performance of the affordable segment (Eagle Lager)”, read a statement on the financial performance of the company issued by Company Secretary Deborah Bwalya on 5th March 2020. “This past year proved to be a challenging one for our Zambian economy, with an environment that turned out to be even tougher than expected”.

In a financial year that also saw a change in the stewardship, the company announced the appointments of Monica Musonda, who also holds the top seat of the Airtel Board, as its new Chairperson along with Jito Kayumba, venture capitalist and TedEx speaker.

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Despite accelerating inflation and depreciating local currency which drove up production costs, the company was able to maintain gross margins above its guidance mark. “Despite the modest single-digit growth in volumes, the Company posted a very strong top-line growth of 17% in Net Producer Revenues for clear beer for the year 2019”. In addition, “clear beer variable production costs and distribution costs were up by 8% and 24% respectively, due to the cost of greater volume, higher cost of foreign currency-dominated imported raw materials following the Kwacha devaluation and increased inter-depot transfers to balance volume demand”. The end result was “clear beer gross margin above the 40% mark, representing an improvement of 25% against prior year results”.

The company was able to marginally reduced distribution costs. However, administration costs were up by approximately 19%. There was also a sizable impairment change on certain financial assets of about K1.8 million compared to K453 thousand in the previous year.

In terms of working capital movement, the balance sheet showed a reduction in inventory indicating that the company was efficiently moving product to consumers. However, there was a marginal reduction in trade receivables during the same period which affected its cash position as there was a sharp decline in “cash & cash equivalents”.

The company’s appetite for short term financing sharply increased during the period. Suppliers though where a lot happier though as trade and other payments were down by approximately 40%.

In its SENS statement, the company had reason to be nostalgic at it had achieved a remarkable milestone in its listing on the LUSE. “We celebrated 22 years of listing on the Lusaka Securities Exchange (LuSE) in 2019, recalling that from an initial market capitalisation of US$10 million in 1997 the Company has grown to over US$336 million, making it the largest company regularly trading on the LuSE”.

As if that was not enough, the company’s market capitalization has also grown in comparison to other listed companies in Africa. “The Company also joined the ranks of Africa’s top 250 public companies by market capitalisation during the year.

The company has also continued to make strides in developing local small-scale farming with their cassava procurement programme. “Through our cassava procurement programme, we provide a market for over 729 verified farmers on the blockchain platform from Luapula, Northern and Muchinga provinces of Zambia”. In 2019 Zambrew bought a capped volume of 1,933 tonnes of cassava, creating farmer incomes of ZMW 2.554 million via mobile money direct transfer.

With the postponement of the AGM certain, following the LuSE announcement following the COVID-19 debacle, which was slated for the end of March 2020, the Board has recommended a dividend for shareholders. “At the board meeting held on 28 February 2020, the Directors recommended declaration of a dividend of K54.6 million (K0.10 per share).

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