Significant decline in Namibia Breweries operating profit

NAMIBIA Breweries Limited yesterday reported a 41,8 per cent decline in its operating profit for 2003, down from N$70,5 million the previous period to N$41 million for the period under review.

Depreciation on investments soared to N$56,9 million, having climbed steadily since 1999 when it was almost N$22 million for the year. However, NBL was “saved” by the promulgation of the Income Tax Amendment Bill, 7 of 2002, which led to a tax return on N$9,5 million, pushing profits after taxes up to N$49 million, Lionel Mathews who heads the companies finances said.The company reported revenue of N$944,5 million for the year ended January 31 2004, up from N$878,9 million the previous year.Full-year headline earnings per share more than doubled with headline earnings per share up to 23,7 cents from 11,1 cents, while the dividend rose to 11 cents from 8,4 cents.Although the depreciation had a significant impact on operating profits, even without it operating profits still dropped 18,9 per cent from the previous year.According to the company this was due partly to high import tariffs imposed by neighbouring Angola and it said the decline in profitability was “of a temporary nature”.NBL said the situation in Angola, its biggest export market outside South Africa, had since been resolved through a bilateral trade agreement.Nambrew is the sole bottler for Pepsi-Cola soft drinks in Namibia and exports to Angola are a major focus area.”The directors are of the opinion that the decline is of a temporary nature and that profitability will be restored over the medium term,” it said in a statement.Although revenues from soft drinks fell to N$119 million from N$200 million, beer revenues were up to N$786 million from N$645,7 million.Dutch brewer Heineken and Britain’s Diageo hold a combined 28,9 percent stake in Namibia Breweries.Heineken and Diageo bought a joint stake in Nambrew last year and this month finalised a joint sales, marketing, distribution venture in South Africa that is set to challenge home-grown giant SABMiller in the lucrative premium beer sector.”The premium beer category in South Africa has become the object of intense competitor activity subsequent to the (Nambrew) group commencing the distribution of the Heineken brand,” NBL said.”This has necessitated an additional marketing investment in Windhoek Lager in South Africa to further augment brand equity, volume and value growth over the long term,” it added.Marcus von Blottniz, Managing Director of the Breweries since September 2003 focused on the extensive restructuring process that the company was involved in.He said since November last year a multi-pronged comprehensive restructuring programme featuring programme implementation, communication and management changes has been ongoing.However, NBL was “saved” by the promulgation of the Income Tax Amendment Bill, 7 of 2002, which led to a tax return on N$9,5 million, pushing profits after taxes up to N$49 million, Lionel Mathews who heads the companies finances said.The company reported revenue of N$944,5 million for the year ended January 31 2004, up from N$878,9 million the previous year.Full-year headline earnings per share more than doubled with headline earnings per share up to 23,7 cents from 11,1 cents, while the dividend rose to 11 cents from 8,4 cents.Although the depreciation had a significant impact on operating profits, even without it operating profits still dropped 18,9 per cent from the previous year.According to the company this was due partly to high import tariffs imposed by neighbouring Angola and it said the decline in profitability was “of a temporary nature”.NBL said the situation in Angola, its biggest export market outside South Africa, had since been resolved through a bilateral trade agreement.Nambrew is the sole bottler for Pepsi-Cola soft drinks in Namibia and exports to Angola are a major focus area.”The directors are of the opinion that the decline is of a temporary nature and that profitability will be restored over the medium term,” it said in a statement.Although revenues from soft drinks fell to N$119 million from N$200 million, beer revenues were up to N$786 million from N$645,7 million. Dutch brewer Heineken and Britain’s Diageo hold a combined 28,9 percent stake in Namibia Breweries.Heineken and Diageo bought a joint stake in Nambrew last year and this month finalised a joint sales, marketing, distribution venture in South Africa that is set to challenge home-grown giant SABMiller in the lucrative premium beer sector.”The premium beer category in South Africa has become the object of intense competitor activity subsequent to the (Nambrew) group commencing the distribution of the Heineken brand,” NBL said.”This has necessitated an additional marketing investment in Windhoek Lager in South Africa to further augment brand equity, volume and value growth over the long term,” it added.Marcus von Blottniz, Managing Director of the Breweries since September 2003 focused on the extensive restructuring process that the company was involved in.He said since November last year a multi-pronged comprehensive restructuring programme featuring programme implementation, communication and management changes has been ongoing.