NBL Financial Results for the year ended 31 December 2022

NBL Financial results 2022

• Net Revenue N$1 860 million, up by 21.3%
• Operating profit N$359 million, up by 0.3%
• Profit after tax (from continuing operations) N$286 million, up by 10.7%
• Earnings per share (from continuing operations) 138.6 cents, up by 10.7%

Business Performance
Namibia Breweries Limited’s (NBL) – a subsidiary of the Ohlthaver & List (O&L) Group saw overall volumes increase by 8.7% on the back of an excellent growth in volumes to Heineken South Africa. Namibian volumes remained under pressure in a subdued economy, with significantly reduced consumer spending on the back of rising prices for basic goods and services, higher interest rates, a 6.9% increase in inflation and a 22% increase in fuel prices.

South African beer volumes returned to pre-COVID levels, with production volumes to South Africa increasing by 48.9%. Tanzania remains NBL’s biggest export market and although export volumes declined by 44.4%, the revenue contribution from these markets benefited from favourable exchange rates. Distributors in several of our export markets experienced economic pressures, while some of the anticipated revenue opportunities from recently entered markets did not materialise as expected.

Half year revenue increased by 20.6% to N$2 389 million on the back of strong demand from South Africa, which also contributed to a 29.9% increase in royalty income.

NBL experienced significant cost pressures, which included a 25% increase in the cost of glass and a 34% increase in the cost of malt. Combined with higher advertising and promotional spending, this resulted in a 0.3% increase in operating profit to N$359 million.

No interim dividend was declared in accordance with the conditions of the Heineken Transaction.
As part of the Heineken Transaction, the special dividend payment of N$26.35 will be paid to shareholders when the disposal of the investment in Heineken SA becomes unconditional. NBL received dispensation from the NSX to publish conditional dividend declaration data in anticipation of the disposal becoming unconditional. A finalisation announcement will be made once the outstanding Conditions Precedent to the disposal have been fulfilled or, if applicable, waived and the disposal has become unconditional.

Subject to the disposal becoming unconditional, holders of ordinary shares will be entitled to the Special Dividend, with the Last day to Trade being 30 March 2023, and payment date being 14 April 2023.

NBL Managing Director (MD), Marco Wenk: “Namibian beer volumes decreased by 3.5% on the back of lower consumer disposable income and overall tough economic conditions. Operating profit remained consistent with prior year, showing a 0.3% increase. This is attributed to our continued drive for cost effective sourcing, overall business cost management, flexible route-to-market and ongoing and innovative sales and consumer engagement initiatives, which ensured resilient and improved earnings under continuous challenging market conditions.

Our Windhoek Draught brand continued to grow and had a wide reach and strong consumer engagement to counteract competitor brands as well as categories beyond beer.

Given our strong and diverse brand portfolio, strong route to market and pricing strategy, as well as world class execution, NBL is well positioned to defend and grow its market share while capitalising on any future growth opportunities.

Windhoek Draught pushed ahead as Namibia’s leading beer brand, outperforming other brands in volume growth. It was also the star performer in South Africa, where it is positioned as a premium brand.
AquaSplash, Strongbow, Hansa Draught and Heineken all performed well over the six months, contributing to positive volume growth compared to the prior year.

The 10-litre Hansa Draught keg that was launched last year in a compact and convenient format performed above expectations as on-site and at-home consumption trends continued.

Horizon, our flavoured non-alcoholic beer, was discontinued as the trend away from non-alcoholic products continued.

Windhoek Lager, Windhoek Draught, Windhoek Non-Alcoholic and Tafel Lager received gold awards at the 2023 international Deutsche Landwirtschafts Gesellschaft (DLG) Quality Evaluation. Windhoek Non-Alcoholic received its first gold award, whereas the other three are now classified as “DLG – Classics”, having received awards for five consecutive years.

Financial Performance
NBL Finance Director, Waldemar von Lieres: “NBL’s performance for the first half of 2023 financial year showed a slight improvement of the comparative period, despite an extremely challenging business environment. Beer volumes in Namibia declined on the back of tough economic conditions with consumers spending less of their disposable income on discretionary spend. Overall margins percentages were lower due to the significant increase in South African volumes, which affected the mix of products sold. Heineken South Africa volumes returned to pre-COVID levels, which supported fixed cost absorption and a 29.9% increase in royalty income for the period.”

Wenk concluded: “The next months will see a significant yet exciting change for NBL and its people. A detailed integration planning process, driven by Heineken, will see the business capitalising on opportunities presented by an expanded portfolio of brands, business synergies and overall global know-how to ensure a strong focus on optimisation, driving a combined supply chain, as well as the implementation of systems and processes to ensure efficiency and overall compliance. NBL will further start implementing plans to create capacity for increased manufacturing in Namibia as it migrates from beer to multiple-beverage categories.

Consumer spend and disposable income is expected to remain muted and as such, initiatives to drive sales will continue while managing costs in line with volumes.
The NBL team is positive and energised by the upcoming changes resulting from the Heineken, Distell and NBL merger, and appreciates the opportunities that will be realised in becoming part of such a significant global entity.”

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