Heineken South Africa (SA) experienced severe trade restrictions in South Africa, contributing to the Namibia Breweries Limited (NBL) to experience a significant downturn in business and a subsequent share of associate loss of N$76.7 million. This is a significant swing from last year’s share of profit of N$450 million, which included a substantial prior year deferred tax asset, derived from previously unutilised tax losses of N$334.7 million.
NBL announced its financial results for the year ended 30 June 2020 last week, where it stated its net profit for the year decreased by 71.7% to N$264 million, mainly as a result of lower volumes and the equity loss from Heineken SA. The NBL Board declared a final dividend of 53c on 9 September 2020, which represents an increase of 6% from the previous period.

NBL’s revenue stood at N$2.6 billion; operating profit was N$453 million, down by 31%; while profit after tax stood at N$261 million, down by 72% – and earnings per share for the year ended 30 June 2020 stood at 126.5 cents, down by 72%.  South Africa entered a national state of lockdown on 23 March, which included a moratorium on alcohol production and sales, as well as inter-provincial and international travel. 
“The ban on alcohol sales partly lifted once lockdown transitioned to level three on 1 June. This lockdown drastically affected Heineken South Africa’s (Heineken SA) business, as well as NBL’s ability to source inputs from South Africa – and transport products between countries, including volumes to South Africa,” reads the report.

NBL chairperson Sven Thieme said the outbreak of Covid-19 has had and continues to have a devastating socio-economic impact. Thieme said Namibia also faces another ‘pandemic’, which is corruption in both the public and private sectors. “We are yet to face the full impact of this twin pandemic situation on our country as it battles to survive economically and socially. With the lack of leadership, the current levels of unemployment, poverty and hunger remain a bitter pill to swallow, though we believe it can be addressed if those in power pull together for the good of all,” he noted.

Thieme further indicated that NBL’s revenues and volumes declined by 14.6% and 16.6%, respectively, due to lockdown conditions and curtailed trading early in 2020. The prohibition of alcohol sales as a measure to lessen the impact of Covid-19 highlighted the sensitive nature of our business.
Corporate relations officer Francios Olivier said pre-Covid-19 – and although Namibia already experienced a subdued economy, NBL sales volumes were delivering fair growth for Namibia, and sales volumes to South Africa and the export markets also showed growth compared to the prior period. 
“Although lost volumes due to the Covid-19 alcohol bans could not be recovered by the end of the financial year, the business was well prepared to capitalise on any volume opportunities both during lockdown but also post the alcohol ban stages,” explains Olivier.

He said the ban on the sale of alcohol during April and May 2020 contributed to a volume decline of -14.6% for Namibia (2019: +3.9%), and a decline of -22.9% (2019: +44.8%) for volumes to South Africa, while export markets showed a volume growth of 10.4% (2019: -31.2%). According to Olivier, towards the end of the financial year, operations resumed with some normality and NBL was able to deliver products to customers and see consumers enjoying their brands again.  - mndjavera@nepc.com.na