According to the 2015 financial report and accounts, Braseries et Limonaderies du Rwanda (BRALIRWA) continued to grow despite escalating competition and uncertainties in the global and regional economies.
According to Jonathan Hall, the company’s Vice Chairman of the Board of Directors and its Managing Director who was presenting the accounts statement for 2015 at the end of April 2016, sales volume and gross revenue grew strongly throughout the year.
Total revenue increased by 9.5%, attributed to both product mix and growth in soft drinks volume. Total sales volume increased by 7.6% of which beer grew by 5.3% and soft drinks by 14%.
The increase in both beer and soft drinks volume comes on the backdrop of an investment drive that has seen Rwanda’s oldest brewery and market leader of the beverage sector inject over US$40 million in both its Gisenyi based brewery and the soft drinks plant in Kigali.
The investment among others aimed at furthering the automation of the production process while specifically in the case of the brewery in Gisenyi, BRALIRWA invested in increasing its storage and fermentation capacities.
This investment drive financed by both equity funds and debt has had an impact on the company’s financial statement.
“The financial impact is reflected in last year’s results as higher depreciation charge, increased debt resulting in higher debt to equity ratio and increased net financing costs that include interest and the cost of currency translation.”
He adds, “To compensate this level of increased cost at a time when currency depreciation has impacted raw material and other costs is a challenge, particularly as passing on costs may not deliver value.”
As a result despite strong sales, revenue growth margins remained under pressure in 2015 resulting in lower levels of profitability for the Rwanda’s largest beverage producer.
Earnings before Interest and Taxation (EBIT) declined by 49.2% to Rwf 13.02 billion and Profit and total comprehensive income (profit after tax) for the year declined by 37.6%.
2015 results however are also affected by other factors besides depreciation and interests on the company’s debt.
For instance as previously announced in May 2015, the upgrading of the company’s ERP accounting system brought to their attention that the previous system installed in 2010 had contained configuration weaknesses that led to an understating of production costs between 2010 and 2014.
“The impact of the system weakness in previous years has been reflected in this annual report and accounts by restating our 2014 comparative figures as well as the 2013 opening balances,” Hall explained.
He however emphasised that the reinstatement has had no impact on cash but rather in the balance sheet through a restatement of retained earnings.
“There is no impact on our current business, current trading and current ability to supply our customers and consumers,” Hall noted concerning the restatement at the time of the announcement in 2015.
Shareholder dividend 2016
The payment of a cash dividend for 2015 for Rwf 5.00 (five Rwandan francs) per share will be proposed to the annual general meeting of shareholders.
This proposed dividend, if approved, will be paid on 27th June, 2016 and will represent 72.4% of the net profit of the year 2015.
Though the 2015 shareholder dividend is 33.3% lower than 2014’s Rwf7.5, it should be reminded that at the close of last year BRALIRWA announced a bonus share for each share to all its shareholders at the time.
BRALIRWA maintains steady consumer prices
Despite economic hardships on not only the Rwandan economy but also the world’s economy, growing inflation of Rwandan franc against the US Dollar which translates into increased cost of production, BRALIRWA has kept steady consumer prices for both its soft drinks and alcoholic drinks.
With regard to soft drinks, for the fourth year in a row, no price increases were taken while for beer, the mainstream beer portfolio was last increased in July 2011.
“This reflects an affordability focus in a market where there is growing competition across sectors,” Mr. Hall shared.
Outlook 2016
But despite the economic challenges of 2015 BRALIRWA’s management are optimistic that Rwanda’s economy will continue to show economic resilience in 2016 despite continued global uncertainties in the world economy which continue to impact African economies.
“In 2015, the Rwandan economy showed resilience and robust growth and we expect that this can continue through 2016 so long as external shocks are limited and manageable,” he said.
He said they therefore anticipate further top line growth this year although cost pressures and constrained consumer spending power will continue to be challenging to the bottom-line.
Rwanda’s Gross Domestic product grew by 7.1% in 2015 and is expected to increase and grow by 7.5% in 2016.
