Local brewer Bralirwa registered a profit of Rwf7.2 billion in 2018, a 42 per cent increase from 2017 when the firm raked in Rwf5.1 billion.
Bralirwa is amidst recovery from persistent challenges such as increased input costs which held back the firm in the previous year.
To register profits, the firm’s sales volumes went up by 14.6 per cent to 1,790,000 hectoliters with the firm attributing it to favourable mix and increased brand promotion activities.
At the moment, the firm is estimated to have about 75 per cent of the local market.
Demissie said that despite a challenging year, the results were driven by revenue management with a focus on cost saving as well as operational efficiencies.
Merid Demissie, the Managing Director, said that despite a challenging year, the results were driven by revenue management with a focus on cost saving as well as operational efficiencies.
In 2018, pricing was taken on soft drinks as the firm sought to compensate for increased fixed costs from operations while currency depreciation resulted in higher costs of raw materials and other costs, the firm noted.
Shareholders can expect a dividend payout of Rwf 5.50 per share if approved by the Annual General Meeting next month.
The dividend is about 78 per cent of the net profit for 2018.
The firm’s debt went up in 2018 by about Rwf5 billion to Rwf47.7 billion with officials attributing it to investments associated with local production of Heineken and higher net finance costs.
The firm has, however, began repaying a long term IFC loan by commencing with a $3.1m payment and also completed repayment of their BPR loan.
Among the major investments by the firms last year include setting up installations to produce the new Made in Rwanda Heineken beer which cost the local brewery about Euro 9m. The firm also invested in a new Enterprise Resource Planning System which brought capital expenditure to Rwf15.2 billion.
Bramin mechanized and Irrigated Maize farm, Bramin farm, a joint venture between Bralirwa and Minimex, the leading maize milling firm, did not fair very well as it was affected by infestations and operational issues.
The firm is unlikely to be expecting returns from the joint venture in the short term but said that they have strengthened the management of the operations to improve yields and are also testing new crop breeds.
The firm’s management says that they are optimistic on good results in 2019 given the prevailing agriculture sector performance.
However, despite the optimism and growth outlook Marcel Oosterveld the firm’s Finance Director said that the is wary of consequences of tax unpredictability as well as access to inputs of production considering that the country is landlocked.
The availability of inputs for production to a great extent determine the affordability and competitiveness of their products.
The firm has previously found itself at crosshairs with Rwanda Revenue Authority following tax audits which revealed discrepancies estimated at about Rwf 6B.
However, Oosterveld said that the issue was settled with the firm paying about Rwf 0.4B on successful resolution of the discrepancy.
“We did not pay the entire amount of the claim, we have a good relation with RRA, whenever this things come up, we try to find solutions, in this particular case, we settled Rwf 0.4B,” he said.
The firms operations in Rwanda bear bears an opportunity for Rwanda suppliers across the value chain considering that the firm imports about 60 per cent of the inputs.
Oosterveld said that they currently work with over 15000 farmers and would be keen on working with more who meet standards requirements.
He noted that they are keen on sourcing more inputs and services locally going forward.
Further opportunities for the private sector lie in distribution of beverages across the country from the firm’s depots.
The firm’s distributor network has slightly gone down in the last year for unspecified reasons.
Merid Demissie the Managing Director of the firm downplayed fears loosing market share to competition saying that increased activity in the beverage market was a position sign of growth on the local scene.
“The beverage market is growing and we have to understand that competition is a good things, the more the better,” he said.
The firm is said to be facing growing competition from Rival brewer Skol Ltd as well as imports as customers disposable incomes grow.