NBL operating profit down 47%

NAMIBIA Breweries Limited (NBL) yesterday announced its financial report for the 17 months ended June 2004, with the group’s operating profit declining heavily by 47,8 per cent to N$36,8 million compared to N$70,5 million for the previous period under review.

The group’s operating margin deteriorated to 2,9 per cent from a previous of eight per cent. The NBL Group board of directors was quick to justify its losses saying: “It must be kept in mind that beer sales are seasonal and that the 17 month reporting period spans two low seasons, distorting the operating margin when compared to a 12 month period.”The results are for a 17-month period after the group changed its financial year-end to June with effect from June 2004.The decline is profits was also attributed to due to ‘tough trading conditions on the domestic beer market, and that the enforcement of the new Liquor Act had its negative effects.The report however states that, despite the decline in operating profit, profit tax and headline earnings per share increased by 74,7 per cent due to a much lower effective tax rate for the reporting period.Net profit attributable to ordinary shareholders was at N$40,2 million compared to 12 months ended January 2003 which was at N$23 million.The financial report also says although sales volumes grew in South Africa, it did so below the overall growth of the premium beer category in which the group competes with its Windhoek Lager range.The group also took a knock due the strong local currency and restructuring due to the Brandhouse joint venture between Heineken, Diageo and NBL.However, NBL remains optimistic about the future saying: “The board is now confident that the foundation has been laid for regaining market share domestically as well as increasing our grwoth in South Africa and other export markets.”This will contribute to sustainable profit growth in the medium to long-term.”The NBL Group board of directors was quick to justify its losses saying: “It must be kept in mind that beer sales are seasonal and that the 17 month reporting period spans two low seasons, distorting the operating margin when compared to a 12 month period.”The results are for a 17-month period after the group changed its financial year-end to June with effect from June 2004.The decline is profits was also attributed to due to ‘tough trading conditions on the domestic beer market, and that the enforcement of the new Liquor Act had its negative effects.The report however states that, despite the decline in operating profit, profit tax and headline earnings per share increased by 74,7 per cent due to a much lower effective tax rate for the reporting period.Net profit attributable to ordinary shareholders was at N$40,2 million compared to 12 months ended January 2003 which was at N$23 million.The financial report also says although sales volumes grew in South Africa, it did so below the overall growth of the premium beer category in which the group competes with its Windhoek Lager range.The group also took a knock due the strong local currency and restructuring due to the Brandhouse joint venture between Heineken, Diageo and NBL. However, NBL remains optimistic about the future saying: “The board is now confident that the foundation has been laid for regaining market share domestically as well as increasing our grwoth in South Africa and other export markets.”This will contribute to sustainable profit growth in the medium to long-term.”