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The East African : Aug 2nd 2015
56 AUGUST 1-7,2015 BUSINESS, MARKETS AND FINANCIAL ANALYSIS THE MARKET WHISPERER EQUITY MARKETS (WEEKLY CHANGE IN BENCHMARK INDEX) NSE 20 Share Index Kenya 4,404.72 -2.13% (CUMULATIVE MOVEMENT) DSE All Share Index Tanzania 2,551.38 -1.17% USE All Share Index Uganda 1,850.00 -2.32% RSE All Share Index Rwanda 143.62 -0.13% JSE All Share Index South Africa 51,957.06 0.17% NGSE All Share Index Nigeria 30,175.63 -3.00% 2 Jan ‘15 2 July ‘15 2 Jan ‘15 2 July ‘15 2 Jan ‘15 2 July ‘15 2 Jan ‘15 2 July ‘15 2 Jan ‘15 pay more for their tipple as East African Breweries Ltd looks for ways to cushion its revenues against the region’s weakening currencies, which have seen the brewer incur $900 million in forex losses in five months. The regional beer is con- sidering increasing prices for some specific brands only. “We are not increasing prices across the board. However, we will look at price increases on individual brands. We have plans, but they are commercially sensitive so we shall not be able to talk about them now,” group managing director Charles Ireland told reporters in Nairobi last week. Mr Ireland said the com- pany, which is listed on the Nairobi Securities Exchange, would also start hedging East Africa currencies to stem further forex losses. “We are looking to miti- gate against future currency risks. East African currencies have been weaken- Cost of weak shilling fo≥ alcohol consume≥s A lcohol consumers in East Africa are likely to 2 July ‘15 2 Jan ‘15 2 July ‘15 which are collectively referred to as EABLi, contributed 10 per cent to the group’s profit. “When we look at our business through a product lens, we see strong growth in premium beer and RTDs more than offsetting slight declines in mainstream and value beers,” said Mr Ireland. Spirits grew by 31 per cent across the region compared with beer, which grew by four per cent largely driven by the premium and value categories. RTDs grew by 70 per cent. During the period under East African Breweries bottling plant in Nairobi. The company has posted $92.21 million profit after tax. Picture: File ing, particularly in the past quarter,” he said. “We are not in the busi- ness of allowing value to slip away from us,” said Tracey Barnes, group finance director. EABL, which is owned by the UK brewing giant Diageo, recorded a 40 per cent growth in net profit for the full year ended June 30, buoyed by increased con- sumption of spirits, premium beer and ready-to-drink (RTDs) spirit cocktails. EABL’s profit after tax increased to $92.21 million from $66 million in the previous year. Net revenues grew 6 per cent to $620.71 million from $585.26 million. However, growth in mainstream and value beers declined across the region. EABL’s stock on the NSE gained 3.51 per cent to stand at $2.84 after the announcement. The bulk of the profit came from the Kenyan operations (61 per cent), followed by Uganda (18 per cent) and Tanzania (11 per cent). Other markets such as South Sudan, Burundi, Rwanda and eastern Democratic Republic of Congo, review, EABL’s revenues from its Kenyan operations grew by three per cent with strong growth across spirits, premium beer and RTDs. Uganda grew four per cent while Tanzania declined by two per cent. Revenues from EABL countries grew 53 per cent, helped by the strong performance of spirits. But performance in South Sudan slowed due to lack of US dollars. The directors recom- mended a final dividend of $0.06 per share. AfDB ≥aises $830m f≥om founding membe≥s THE AFRICAN Development Bank has raised $830 million in share capital from 20 founding countries to finance infrastructure development under the newly created Africa50 initiative. Africa50 is a new platform be- ing promoted by AfDB to mobilise a pool of funds to bankroll infrastructure investment on the continent, which has a daunting annual deficit of over $40 billion of the more than $90 billion needed every year. The commitment by the 20 African countries is a first step towards attracting institutional investors, including sovereign wealth funds, pension funds, insurance companies and other sources of long-term finance around the world. Africa50’s medium term capitalisation is projected to reach $3 billion in the medium term. The founding countries are Be- nin, Cameroon, Congo, Djibouti, Egypt, Gabon, Ghana, Ivory Coast, Madagascar, Malawi, Mali, Mauritania, Morocco, Nigeria, Niger, Senegal, Sierra Leone, Sudan, Gambia and Togo. Although East African countries are not among the 20 founding members, they still have an opportunity to invest in the Africa50 initiative when the second clos- ing for investors is held before the end of the year. The first opportunity to invest in the initiative was given to only African countries but subsequent investment drives will accept capital from other non-sovereign investors both in Africa and outside. The second closing is expected before the end of 2015. Africa50 aims at mobilising long-term savings for the financing of infrastructure projects. Published at Nation Centre, Kimathi Street, and Printed at Mombasa Road, Nairobi by Nation Media Group, Box 49010, GPO Nairobi, 00100. Registered at the GPO as a newspaper. Nairobi Office, Tel: 3288000, 211448, 337710, Fax 214531, 213936. Dar es Salaam Office. Tel: 2119657/8. Kampala Office, Tel: 232771, 232772. Fax 232781 Download free QR Readers from the web and scan this QR (Quick Response) code with your smart phone for pictures, videos and more stories Acquisition of UAP to boost custome≥ t≥ust THE ACQUISITION of UAP Group by Old Mutual could easily fix customer confidence gaps in Uganda’s insurance market while offering valuable growth synergies crucial for attaining industry dominance. The South African insurer recently acquired 60.7 per cent shareholding in UAP Group of Kenya, a prominent insurance player with subsidiaries in Uganda, Rwanda, Tanzania and South Sudan. The latter has also invested in asset management and real estate businesses. Past incidents of rogue insur- ers that fleeced clients continue to haunt the Ugandan market, forcing some players into partnerships for credibility. This partly explains persistently low penetration of insurance products, currently estimated at less than two per cent of gross domestic product. Increased entry of leading global players with longer commercial experience would therefore diminish consumer doubts and raise uptake of insurance products, analysts say.
Jul 26th 2015
Aug 9th 2015