Namibia Breweries Limited (NBL) operating profit increased by 35.2% to N$613 million.
It exceeded expectations in a year characterised by muted economic activity, trade restrictions, curfews, supply chains disruptions, lockdown conditions and a devastating third wave of the pandemic in the country, towards the end of the financial year.
Announcing the 2020/21 results yesterday, NBL’s Managing Director (MD) Marco Wenk said net revenue remained consistent with the prior year despite lower volumes and was bolstered by the first inflation-related price increase on returnable packs in 24 months, which was implemented in June 2020.
According to Wenk, revenue remained stagnant at N$2.649 billion compared to the previous year’s N$2.646 billion.
“Beer volumes in Namibia for 2021 increased by 13% against 2020, almost matching those achieved in 2019, being only 2% lower in comparison. Overall, volumes during 2020 decreased by 16.6% compared to 2019. Volumes in 2020 were predominately affected by trade restrictions, as a result of the pandemic across most of NBL’s markets,” Wenk explained.
He added that production volumes to South Africa continued to be severely constrained due to alcohol bans and trade restrictions in that country, falling by 36% against 2020 and 51% against 2019.
“As a result, Heineken SA was not able to order the full annual contracted volumes for the South African market, resulting in a shortfall. The shortfall was captured in a variation agreement which made provision for half of the shortfall to be paid to NBL in cash while the remaining half would be deferred and added to the production volumes to be sent to Heineken SA by 30 April 2022,” explained the MD.
Meanwhile, Tanzania once again emerged as NBL’s biggest export market and the local brewer also signed up a new distributor, with the transition contributing to a drop of 16% in overall export volumes against 2020 and a 7% decrease compared to 2019. Wenk noted that Zambia remains a focus country and will be one of the major volume contributors going forward.
NBL further announced that strong cash flows were maintained during the year. Net cash flow from operating activities increased to N$544 million from N$24 million last year. This was mainly due to the absence of any significant lockdown restrictions combined with cost saving initiatives, while a strong focus was placed on managing working capital. Net cash outflow from investing activities of N$98 million was lower than the outflow of N$143 million in 2019/2020.
Furthermore, Wenk confirmed that Heineken N.V. made an offer to acquire NBL’s 25% shareholding in Heineken South Africa Proprietary Limited. He said discussions are still ongoing and several aspects still need to be considered before unveiling more information to the public.
As per the conditions in this agreement, no further dividends or cash distributions can be paid until a decision is made: “So we are holding back the dividends pending that decision,” Wenk stated.