Rwanda: Rwanda’s largest brewer Bralirwa reports 3.8% dip in half-year profit

Rwanda’s largest brewer and soft beverages company Bralirwa’s half year profit has dipped by 3.8 per cent to Rwf41.3 billion, from Rwf43 billion recorded in the same period last year, The New Times reported, citing the firm’s financial statement.

The beverages firm attributed the drop to ‘challenging times’ as its sales volumes went down by about 15.4 per cent. In the first half of this year, Bralirwa sold 751,000 hectolitres compared to 888 hectolitres in the first six months of 2016, the report for the year ended June 30, 2017 shows.

The firm noted that sales volume decreased largely due to soft drink and beer price increases it implemented in August 2016 and January this year, respectively.

With increasing competition in the local market, this hurt sales leading to low revenues being registered over the reporting period, it added.

The firm explained that the price increase was necessary to compensate for rising fixed costs, such as the “high cost of raw materials which had to be passed to the consumers”.

However, Victor Madiela, the Bralirwa managing director, said the firm has implemented price and mix management, as well cost management initiatives to cope with the challenges in the business environment and stay competitive.

“Our sales volumes were adversely impacted by our price increase in the mainstream beer segment. Therefore, given this and the challenging operating environment, we had to implement these initiatives to limit the impact on the results,” Madiela, who is also the vice-chairperson of the board, said in the statement released on August 11.

“However, investments in the business are now normalised after the conclusion of the five-year investment programme last year. Leveraging these investments has enabled us to further optimise production costs and this combined with our ambitious cost management programme contributed positively to the bottom line.”

The Heineken intercompany loan was restructured and is now in francs as opposed to the greenback to reduce impact of forex rate fluctuations on their finance costs.

The firm also renegotiated the terms and conditions of their credit facilities with its lenders, which has further reduced their net finance cost, according to Madiela.

Going forward, aware of the increased competition in the market the firm expects to improve volume sales as the beverage market improves, he added.

“Further pressure is expected on the topline this year given cost pressures and constrained consumer spending power. This will continue to challenge the bottom line,” the firm notes.

To deal with the challenge, the firm is rolling out cost management initiatives and new product introductions during the remaining months of the year.

15 August, 2017