Sechaba Brewery Holdings Limited, the holding company of Kgalagadi Breweries Limited (KBL), has experienced a decline in financial performance for the year ended 31 March 2015.
The decline in the financial performance, the company said, is due to the negative mix impact of brand, pack and category.
In a statement accompanying the financial results, Group Managing Director, Johan de Kok notes that KBL saw a growth in bulk packs and a decline in cans both in the beer and soft drinks categories.
“This caused a reduction in the actual gross margin ratio of the associate together with the increase in fixed costs due to inflation and volume growth,” he said, adding that fixed costs and marketing costs were within budget.
In terms of volume performance, de Kok states that total volumes for the year ended 4.9 percent above prior year. Clear beer grew by 4.8 percent with 750 ml Returnable Glass Bottle (RDB) Pack continuing to drive the growth.
Alcoholic Fruit Beverages are said to have shown significant growth, finishing 831 percent over the previous year due to the on-going growth of Core RGB and category expansion.
Sparkling Soft Drinks are thought to have performed well above expectations finishing the year 12.0 percent ahead of the previous period. The Non-Alcoholic Beverages (NAB) category ended the year with a 15.6 percent increase attributed to strong growth by Source Water and Mageu, combined with incremental volume emanating from the mid-year introduction of Mazoe.
As it has become a trend, sales volumes of opaque beer declined by 4.3 percent which de Kok says is due to the continuing impact of the Traditional Beer Regulations (TBR) and the discontinuance of exports to South Africa.
In the context of operating environment, Sechaba has had to deal with several regulatory issues such as the TBR. In respect to the challenges faced by Sechaba subsidiary, KBL as a result of the regulations, the challenges are said to have continued over the year.
Another regulatory issue affecting KBL is the levy on alcoholic beverages which has since its introduction in 2008 been augmented on yearly basis and currently stands at 55 percent with last adjustment coming on the 19th December 2014.
During the year, Sechaba, which has a market capitalisation of P3.7 billion has declared and paid a dividend of 16 Thebe per share. On Friday the group’s share price stood at 2850 Thebe per share.