NBL financial results for the year ended 30 June 2020

PERFORMANCE HIGHLIGHTS

• Revenue N$2.6 billion, down by 14.6%

• Operating profit N$453 million, down by 30.5%

• Profit after tax N$261 million, down by 71.9%

• Earnings per share 126.5 cents, down by 71.9%

• Final dividend per ordinary share 53 cents, up by 6.0%

Business Performance

Namibia Breweries Limited’s (NBL) – a subsidiary of the Ohlthaver & List (O&L) Group – overall volumes declined by 16.6% given an unusually challenging year as a result of COVID-19. 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 our 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. The ban on the sale of alcohol during the months of 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 our export markets showed a volume growth of 10.4% (2019: -31.2%). Towards the end of the financial year, operations resumed with some normality and we were able to deliver products to customers and see consumers enjoying our brands again. Revenue decreased by -14.6% (2019: +15.3%) for the full year after several months of lockdowns and alcohol prohibition in both our main markets.

Heineken SA experienced severe trade restrictions in South Africa, contributing to the NBL 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’s net profit for the year decreased by 71.7% to N$264 million mainly as a result of lower volumes as well as the equity loss from Heineken SA.

The NBL Board declared a final dividend of 53c on 9 September 2020, which represents an increase of 6.0% from the previous period.

NBL Managing Director (MD), Marco Wenk: “While NBL has seen significant growth over the past years, current economic conditions demand that we need to adjust our ways of working to be able to defend market share and continue growing volumes in future. Fortunately, NBL has a strong offering through brands such as Tafel Lager, Windhoek Lager, Windhoek Draught and King Lager to enable us to defend market share in all segments. We are exceptionally proud for having remained a sustainable business over the last 100 years.

NBL has not only succeeded in becoming a high performing entity but has also set a benchmark for how to endure and continuously find opportunity to remain relevant. The business has gone through many phases and we are confident that we are well positioned to weather the current period of uncertainty and positively reinvent NBL.”

Brands

Windhoek Non-Alcoholic, Tafel Radler Grapefruit and McKane Dry Lemon were launched as new offerings in the low-to-no alcohol segments. Volumes exceeded expectations, partly due to the increased uptake during lockdown.

King Lager, NBL’s value segment brand, showed good growth during the financial year.

Awards

Windhoek Lager, Windhoek Draught, Windhoek Light and Tafel Lager received gold medals at the 2020 international Deutsche Landwirtschafts Gesellschaft (DLG) Quality Evaluation. Windhoek Non-Alcoholic and Tafel Lite received silver medals.

NBL was further awarded the Large Enterprise Company of the Year: Joint First Place and the Large Enterprise Product of the Year: First Place at the Namibian Standards Institution’s 2019 National Quality Awards.

NBL was again accredited as a Great Place to Work® in Africa and ranked overall 5th place among large corporate organisations in Africa.

Financial Performance

NBL Finance Director, Waldemar von Lieres: “The financial impact of COVID-19, including the suspension of production, trading and exports, was stifling. NBL’s volume growth had been gaining momentum since the positive turn in 2019, until business came to an almost complete halt at the end of March 2020 up to the end of May 2020. As a result, revenue decreased by 14.6% to N$2 646 million (2019: N$3 098 million).”

Outlook

Wenk concluded: “We expect volumes in our core markets to remain under pressure in the short-to-medium term given the economic, business and consumer impact of COVID-19 lockdowns and restrictions. Our focus will continue being on stabilising the business while placing high emphasis on maximizing volumes, delivering at the lowest cost and ensuring the best price at the highest quality. In addition, stock availability, production efficiency and brand innovation will remain key to recover to normal volumes while protecting margins.

Marking 100 years, NBL continues to be resilient, despite difficult conditions. We remain committed to the highest quality, purposeful leadership, committed employees, strong relationships, breakthrough thinking and innovative brands”.

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