Namibia Breweries Limited (NBL) reported a 15% increase in net revenue to N$2.139 billion for the six months ending 31 December 2023 attributed to strategic price adjustments and the successful integration of the Distell portfolio.
Despite the positive revenue figures, Namibian beer volumes experienced a decline of 13.7%, while production volumes in South Africa plummeted by 67.1%.
“Revenue from beer sales in Namibia decreased, compounded by a steep decline in revenue contribution from South Africa, driven by aggressive pricing tactics from competitors,” said NBL Managing Director Petrus Simons.
Export volumes to other markets showed a slight increase of 2.7%, with Windhoek Lager emerging as the top performer by volume.
Simons acknowledged operational challenges, noting “operating profit declined by 13.8% to N$310 million, primarily driven by increased operating expenses, particularly associated with the expanded portfolio.”
“In response to escalating operating costs, we have initiated a comprehensive cost management initiative aligned with HEINEKEN’s Fund the Growth, Fuel the Profit strategy.”
Looking ahead, NBL aims to enhance operational efficiencies and foster synergies.
“Further efficiencies and synergies will emerge in the next twelve months, including joining the HEINEKEN global procurement platform. This will enable NBL to leverage scale for cost benefits in packaging and raw material as legacy contracts conclude,” Simons outlined.
Despite challenges in the trading environment, NBL has prioritised cash management initiatives. This comes as the company reported a notable increase in net cash flow from operating activities, reaching N$482 million, compared to N$199 million in the previous year.
Despite escalated investments in production facilities and expansion endeavours, NBL witnessed an increase in cash balances over the past six months.
“Our focus on effective cash management, coupled with additional financing obtained to acquire Distell, has positioned us favourably to optimise cash generation in the short term,” Simons commented.
“In terms of volume performance, we remain committed to supplying HEINEKEN Beverages South Africa with contracted beer volumes. However, potential impacts from subdued demand in the foreseeable future are acknowledged.”
Moreover, the MD noted that NBL’s commitment to excellence was underscored by three brands receiving Deutsche Landwirtschafts Gesellschaft (DLG) Gold awards, further solidifying their position as industry leaders.
The newly acquired portfolio exhibited promising performance, with brands like Savanna and Castelo leading the pack.
“As NBL navigates through the evolving market landscape, premiumisation remains a focal point to enhance consumer value, the integration of NBL and Distell portfolios, while posing certain challenges, has been met with support for customers throughout the transition process,” highlighted Simons.
The newly acquired portfolio delivered a pleasing performance, led by Savanna and Castelo. Ciders showed promising growth, with Savanna and Hunter’s increasing volumes.
Similar positive trends are evident in the spirits category, especially in premium offerings, where Richelieu delivered a strong performance.
Ready-to-drink beverages also presented growth opportunities while wine volume remained relatively flat.
“As NBL adjusts to the expanded portfolio, premiumisation is prioritised to enhance consumer value. Data-driven consumer analysis will drive future innovation. Integrating the NBL and Distell portfolios and adjusting trade terms posed some challenges for customers,” affirmed Simons.
He added that the announcement of NBL’s financial year-end change to 31 December aligns with HEINEKEN’s schedule, marking a significant milestone in their journey towards sustainable growth and regional prominence.
With the declaration of the first ordinary interim dividend since May 2021, NBL underscores its commitment to delivering value to its shareholders, further cementing its position as a stalwart in the beverage industry.
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