National Breweries Plc has reported a loss of K28.80 million according to abridged unaudited financial results for the 6 months’ period ended 25 September 2019, according to a statement from the company.
The company which is currently undergoing reorganisation and restructuring, has seen its administration costs increase by 3% over the first six months of its current financial year.
“Compared to the prior period total volume sold decreased by 20% due to a 33% price increase”, read a statement issued by Vongai Chiwaridzo, its Company Secretary, on 15th November 2019. “However, the gross margin improved by 7% due to a favourable pack mix and prices increases”.
In SENS Announcement from National Breweries of 2nd January 2018, the company announced that Heinrich’s Syndicate Limited (“Heinrich’s”), a subsidiary of Anheuser – Busch InBev SA/NV had entered into a Share Purchase Agreement with Delta Corporation Limited for the sale of all of the shares held by Heinrich’s in Natbrew to Delta.
The company has also advised shareholders on the impact of macro conditions that have seen borrowing costs rise. “Finance costs increased due to higher cost of borrowing and increased loans. The net impact of these developments was a reduced loss for the period compared to 2018”.
The company acknowledges it is in difficult time according to their brief statement. “Whilst acknowledging the numerous challenges the company faces, management continues to take steps to contain costs and offer consumers competitively priced quality products”.
However, a closer look at the abridge cash flow statement, net cash utilized in investing activities increased to K5.70 million from K1.40 million in the previous period used for the purchase of property, plant & equipment. This is despite its balance sheet showing a reduction in total assets.
The company sat on K26.30 million of inventory compared to K16.80 million in the previous period. This means that its path to customers has weakened during the period under review likely a symptom of reorganization.
In terms of its capital structure, the company now focuses on using short term borrowings whose composition can be overdrafts. Cash utilized in operating activities increased to K8.40 million compared to K4.90 million.
“The Whilst acknowledging the numerous challenges the company faces, management continues to take steps to contain costs and offer consumers competitively priced quality products”, admitted the Company Secretary’s statement issued on behalf of the board. Chibuku needs all the strategic thinking that the board can instill in the management team post the reorganization for a comeback.