No Dividends – Bralirwa to Propose to Shareholders As Tough Year Looms

A section of Brwalirwa factory-Photo Internet

In a bid to preserve its cash flow and sustain operations, local brewer Bralirwa Plc will suggest not pay out 2019 dividends to shareholders as the beverage manufacturer anticipates hard times resulting from the New Coronavirus pandemic.

Bralirwa Plc which released financial results for the calendar year 2019 on Friday said that total volumes for the year increased by 5.4 percent while beer volume increased by single digit, buoyed by a strong performance of Primus, Mutzig and Amstel brands.

Revenues for the brewer hit Rwf101 billion compared to Rwf99 billion in 2018, thanks to the three brands which continue to appeal to the market.

“Revenue was 1.8% higher than last year at Rwf101 billion compared to Rwf99 billion in 2018, due to strong total volume growth of 5.4 percent partly offset by negative mix driven by Primus and locally produced Heineken® as well as the prior year tax adjustment on excise duty recorded in the first half of the year,”

“Whilst the beer market recovered from prior years’ price increases, it remained very competitive,” Bralirwa said in a statement on Friday.

However, the brewer which is listed on the Rwanda Stock Exchange (RSE) is anticipating a tough year due to the disruption caused by COVID-19, prompting it putting on hold the payment of dividends to shareholders.

“Given the significant uncertainties on the extent and duration of the disruption as a result of the COVID-19 outbreak, the Board is taking steps to protect our cash flow to preserve liquidity in the interest of our Company, and as such proposed not to pay out any dividend on the 2019 result,”

“This proposal will also be subject to approval during the upcoming AGM,” Bralirwa said ahead of the conference call with investors set for March 31.

Regarding the 2019 performance, Merid Demissie, the Managing Director and Vice Chairman of the Board of Bralirwa said that the company undertook several frugal measures to deal with operational challenges and tax adjustments which affected the performance.

“In 2019, the overall top line results improved compared with 2018. Revenue management combined with a focus on cost savings as well as operational efficiencies positively impacted both the top line and gross margin,”

“Despite this positive top line performance, operating results were adversely impacted by a number of one offs including prior year tax adjustments, an impairment on the loan to Bramin and a number of provisions. In order to drive sustainable performance, we continued to invest in our people, brands, capacity, sustainability and digital solutions,” Demissie said.

Bralirwa also registered a decline in soft drink volumes which decreased by a mid-single digit due to the price increase on RGB 30cl and 50cl in 2018 and only started to recover half way through 2019.

The price increase was introduced in 2018 to compensate for increased operational costs. In terms of investments, Bralirwa’s capital expenditure in 2019 decreased to Rwf12.6 billion compared to Rwf15.4 billion in 2018.

In 2018, the brewer invested heavily in the local production of Heineken and the construction of the waste water treatment plant at its Gisenyi brewery among other investments.

The brewer is also working to reduce its debt, which it says remains ones of its priorities.
“Due to repayment, the USD denominated long-term IFC loan is now Rwf 14.6 billion, this follows the repayment of the BPR loan in 2018,”

“As a result our net debt position decreased to Rwf41.3 billion compared to Rwf 47.7 billion in 2018, despite the reclassification of the Bramin long-term loan to investments. Net finance cost decreased to Rwf 7.8 billion as opposed to Rwf 8.1 billion in 2018,” Bralirwa said.

Preparing for the worst

With the COVID-19 outbreak threatening economies and business worldwide, Bralirwa anticipates a volatile year characterized by uncertainties and volatility, affecting 2020 plans.

“Our initial plan for 2020 was further top line, profit and margin growth in the context of continued outperformance of the Rwandan economy relative to the broader African region driven by new product introductions, cost management and further debt reduction,”

“However, the outbreak of COVID-19 represents an unprecedented health crisis and macro-economic risk, which is likely to have a significant impact on the economy and our business in the near term,” the Brewer said.

Founded in 1957, Bralirwa is the leading manufacture of soft drinks and beers in Rwanda. Since 1971, Bralirwa is a subsidiary of Heineken N.V., which holds 75% of the shares of Bralirwa with the remaining 25% listed on the RSE.




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