Bralirwa, the country’s largest brewer has recorded a decline of 82 percent in its profit before tax to Rwf 929million in the first half of 2016 down from Rwf 5,167 million in the same period under review in 2015.
The brewer who also recorded a poor performance on its counter at Rwanda stock exchange in the first half of this year attributes the drop to higher interest expenses as well as instability in the foreign exchange market.
“The significant decline is attributed mainly to higher interest expenses on loans and losses following revaluation of foreign currency and denominated liabilities due to devaluation of the Rwandan franc,” said Jonathan Hall, Managing Director, Bralirwa on Friday.
Also, the investment by the company in its Gisenyi plant and PET line of the Kigali soft drinks factory which were commissioned recently resulted as Hall says, “in increased depreciation impacting our results from operating activities”.
According to a statement from the company, a subsidiary of Heineken International, net finance cost increased to Rwf 4,892 million(6.2 per cent) in the first half of 2016 up from Rwf 1,104 million in the same period in 2015.
The company also announced its earnings per share (basic and diluted) at 0.58 in the first half of 2016 from 3.58 in the first half of 2015 a drop of 83.8 percent.
Despite this, Bralirwa registered a growth in its volumes as well as revenues in the first half of 2016, with total sale volume growing by 3.5 percent.
Soft drinks registered highest increase in sale with 6.3 percent compared to 2.2 percent increase in beer sales and for soft drinks which was driven by the commissioning of polyethylene terephthalate (PET) bottle-a plastic bottle.
“Despite an increase on operating costs, our net revenue increased by 6.2 percent thanks to a favorable product mix innovations and growth in soft drinks volume,” Hall told KT Press.
Experts say the brewery sector which had to brave for volatility in the foreign exchange market as well as global uncertainties is expected to further go through tough times through the year.
Hall expects a top line growth in the remaining half of the year, “following the expected completion of the investment program in 2016, we intend to start reducing foreign exchange denominated debt from 2017 onwards.”
However, Hall did not rule out cost pressure and constrained consumer spending power.