Bralirwa Ltd has released its full financial results for 2016. They show organic revenue growth of 5.6% mainly due to soft drink price increases and beer volume growth, a reduction of total volume of 1.4% and a decline of results from operating activities by 7.0% due to lower volumes and rising input costs, only partially offset by the price increase.
“We delivered revenue growth despite a challenging operating environment, with volumes in soft drinks particularly impacted by the price increase,” remarked Victor Madiela, vice-chairman of the Board and managing director of Bralirwa. “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.”
Bralirwa’s revenue showed sustained growth of 5.6% to Rwf 88.8 billion in 2016 from Rwf 84.1 billion in 2015, despite a slight decrease of the total sales volume by 1.4%. The volumes were impacted by the increase in the price of soft drinks in August 2016 for the first time in five years.
In a statement, Bralirwa said that to compensate for the increase in fixed costs from operations, at a time when the currency depreciation is raising the raw material and other costs, it had to pass on some of these costs through a price increase on its soft drinks portfolio. Despite lower volumes, driven by both affordability issues and a competitive market, Bralirwa nevertheless managed to deliver revenue growth.
“Supported by strict cost management, Bralirwa mitigated the impact on results from operating activities,” the statement reads.
Consequently, Bralirwa’s results from operating activities declined by 7.0% from Rwf 13.0 billion to Rwf 12.1 billion and profit and total comprehensive income for the year 2016 declined by 80.3% from Rwf 7.1 billion to Rwf 1.4 billion, resulting in an earnings per share of Rwf 1.36.
2016 marked the fifth consecutive year of investment by Bralirwa in both production sites – the brewery in Gisenyi and the soft drinks plant in Kigali – which concludes the company’s investment program aimed at adding production capacity, replacing existing facilities, reducing the environmental impact and improving quality and innovation capabilities.
The 2016 innovations include Mützig Lite and Huza in beer and PET bottles in soft drinks; the latter also enabled export of soft drinks to the DR Congo.
Bralirwa’s total capital expenditures in 2016 amounted to Rwf 14.9 billion and the financial impact is reflected in a higher depreciation cost, increased debt to finance these investments, and a higher debt to equity ratio. The investment also resulted in an increased net financing cost including both the higher interest cost and the currency translation impact.
Outlook for 2017
According to Bralirwa’s statement, “ongoing uncertainties in the world economy are expected to continue to impact African economies. In 2016 the Rwandan economy showed resilience and robust growth and we expect that this can continue through 2017 so long as external shocks are limited and manageable.”
“We therefore anticipate further top line growth in the course of 2017, although cost pressures and constrained consumer spending power will continue to challenge the bottom line,” the communniqué adds. “Our ambitious cost management program, innovations, new product introductions in the markets and reduction of our debt burden will be top priorities for Bralirwa in 2017 in order to restore margins.”
Bralirwa also announces that the payment of a cash dividend for 2016 of Rwf 1.00 per share (2015: Rwf 5.00) will be proposed to the annual general meeting of shareholders scheduled for 24 May 2017. The dividend represents 73.5% of the net profit of the year 2016.
On 26 April, a conference call will be held to discuss Bralirwa’s full year 2016 financial results, which will also be webcasted live via the investor relations section of the company’s website