beverages firm, Bralirwa, anticipates further growth for its top line this year, but cost pressures and constrained consumer spending power will continue to challenge the bottom line, the firm said as it announced its 2016 financial statement Thursday.
“Our ambitious cost management programme, innovations, new product introductions in the market and reduction of our debt burden will be top priorities for Bralirwa in 2017 in order to restore margins,” said Victor Madiela, the vice-chairman of the board and managing director of Bralirwa, in the financial statement.
The brewer said though the ongoing uncertainties in the world economy would continue to impact African economies, the local economy showed resilience and robust growth last year, a trend it said could continue through 2017 “so long as external shocks are limited and manageable”.
According to the results, the firm’s revenue grew by 5.6 per cent for the period ended December 31, 2016 to Rwf88.8 billion, from Rwf84.1 billion the previous year, despite a slight decrease in its total sales volume of 1.4 per cent.
This was mainly driven by soft drink price increases and beer volume growth, said Madiela, adding that the drop in volumes was due to soft drink price increase in August 2016, the first price rise for “our soft drinks portfolio in five years”. The slight decrease in volumes was in line with expectations, he added.
“Despite lower volumes, driven by both affordability issues and a competitive market, Bralirwa managed to deliver revenue growth. The soft drinks portfolio price increases sought to compensate for the rise in fixed costs from operations and effect of currency depreciation as well as raising the raw material and other costs,” he said.
The firm said it employed strict cost management to reduce the impact on results from operating activities, which consequently, declined by 7.0 per cent from Rwf13.0 billion to Rwf12.1 billion. Its profit and total comprehensive income for the year 2016 declined by 80.3 per cent from Rwf7.1 billion to Rwf1.4 billion, resulting in an earnings per share of Rwf1.36.
“We delivered revenue growth despite a challenging operating environment, with volumes in soft drinks particularly impacted by the price increase. Furthermore, we continued to invest in the business for the future and this year completed a major investment programme in production capabilities ensuring that Bralirwa can grow efficiently, innovate quickly, and reduce the impact on the environment,” Madiela said in the statement.
According to the statement, Bralirwa has concluded its investment programme aimed at enhancing production capacity, replacing existing facilities, reducing the environmental impact, and improving quality and innovation capabilities.
This follows a five-year investment initiative by Bralirwa in both production sites, the brewery in Gisenyi and the soft drinks plant in Kigali that ended last year. The Rwanda Stock Exchange listed firm noted that the investment enabled it to export soft drinks to the Democratic Republic of Congo (DRC) and expand its product offerings
The brewer’s total capital expenditures were recorded at Rwf14.9 billion last year. “And the financial impact is again reflected in a higher depreciation cost, increased debt to finance these investments, and a higher debt to equity ratio,” it said.
The investment also resulted in an increased net financing cost, including both the higher interest cost and the currency translation impact, the firm added.
Meanwhile, the firm will propose a cash dividend payment of Rwf1.00 per share for 2016 to the May 24 annual general meeting of shareholders. This compares to Rwf5 per share dividend payment last year. The dividend represents 73.5 per cent of the 2016 net profit, and, if approved, will be paid on June 23, subject to a withholding tax.
However, only those who will be in the register of shareholders by the close of business on May 17 will be paid.