Windhoek
On Friday Namibia Breweries Limited (NBL) announced its annual financial results that indicate profit after tax increased by 43.8 percent, mainly due to the deferred tax write-back in the current year.
As at December 01, 2015, Heineken South Africa had an unrecognised deferred tax asset amounting to N$1.6 billion. In 2013, the O&L Group recognised a full write-down of its portion (15.5 percent) of the deferred tax asset in Heineken SA (formerly known as DHN Drinks (Pty) Limited), amounting to N$188.1 million.
During the current year, after the restructuring of the South African operations, the directors considered that at year end, a portion of the N$1.6 billion assessed loss in Heineken SA is recoverable and therefore included an amount of N$89.2 million, being its share of the deferred tax asset included in the Heineken South Africa (Proprietary) Limited accounts.
Overall, NBL delivered excellent results for 2016, growing operating profit and Namibian beer volumes by 6.7 percent and 8 percent respectively. Turnover is down by 0.3 percent and is mainly impacted by volume migration to South Africa.
As a result of the volume migration, volumes shipped to RSA were down 43 percent over the comparative period, in order to efficiently utilise capacity and maximise the return on investment.
Operating profit is up 6.7 percent and the solid increase is attributed to a positive volume mix, constant focus on first time right production, efficiencies in operating costs and strong gross margins resulting from favourable price variances.
Earnings per share and profit after tax are both up 43.8 percent and headline earnings per share slightly down by 0.7 percent. The NBL Board declared a final dividend of 40c on September 6, 2016, which represents an increase of 8 percent from the previous year.
“NBL’s solid performance was the direct result of employees taking ownership and bringing our purpose ‘Creating a Future, Enhancing Life’, to life. We brought a sense of urgency, speed of execution, innovation and breakthrough intent into all our conversations. These results were achieved despite continued macro-economic challenges, volume migration to South Africa and exchange rate impacts. We wish to thank all NBL shareholders, internal and external stakeholders, as well as our loyal customers and consumers for their continuous support and trust in NBL,” said NBL Managing Director Wessie van der Westhuizen.
Namibian beer volumes continue to grow and increased by 8 percent compared to the previous period, driven predominantly by Tafel Lager sales. The current year saw the launch of two new beer brands, King Lager and Amstel Lite. King Lager is the first commercial beer brewed from local barley. In addition to a new unique brand for NBL, the barley project is expected to create an additional 2 500 Namibian job opportunities over a 10-year period – a major contributor to the group’s vision of creating 4 000 additional job opportunities by 2019.
“We further launched two new soft drink variants, as an addition to our non-alcoholic portfolio, being McKane Lemonade and Vigo Marula Lite. Windhoek Draught and Windhoek Lager continued to grow and excite its consumers by amongst others, hosting the Boyz II Men concert and supporting various other campaigns. NBL has also strengthened its strategy to position itself in the craft beer market and started trading in the mainstream water category with the brand Aquasplash,” he adds.
“NBL delivered a solid operating margin of 22 percent despite very strong foreign exchange fluctuations. The Namibian beer market continues to grow and strengthen our leading competitive position, resulting in an increase of 8 percent from the previous year. We continuously increase our support to local procurement partners to further develop the Namibian economy and mitigate foreign exchange exposure. In light of that, we have achieved a local spend figure of 38 percent during the current year,” said NBL Finance Director Graeme Mouton.
On December 01, 2015, NBL acquired 25 percent of the issued share capital of Sedibeng Brewing and an additional 9.5 percent of the issued share capital of DHN Drinks, which is now called Heineken South Africa. With effect from December 31, 2015, Heineken South Africa acquired the assets and operations of the Sedibeng Brewery.
“Despite the challenging environment we operate in, we are optimistic about our future business outlook. We are committed to drive our innovation agenda to deliver products that meet the changing needs of our consumers. The Namibian market is fairly saturated but increasingly dynamic due to changing consumer trends. We will maximise on our strong distribution network, which will serve us as we diversify into other beverage categories and continue to leverage and maximise on the synergies expected from our new partnership with Heineken,” Van der Westhuizen noted.
He adds that NBL will continue to execute its water mitigation plan in order to reduce dependency on public water resources, thereby contributing to the sustainability of the economy.
“NBL is continuously engaging with strategic partners such as the government and the City of Windhoek to find and support solutions, and has indicated its willingness to co-invest. Currently, 4.4 litres of water is used to produce one litre of beer. The 3.4 litres beyond the actual water for the product do not go to waste – the majority is reclaimed and transferred into the city’s effluent system, where it gets recycled,” said Van der Westhuizen.