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Alba Iulia
Sunday, May 22, 2022

Subsidy removal hit into our profits-ZB

Economy Subsidy removal hit into our profits-ZB

Beer from the markets
Beer from the markets

Zambian Breweries Plc has revealed that the decision by government to reduce subsidies on fuel and maize significantly affected its operations.

Zambian Breweries said the removal of subsidies in May reduced disposable incomes leading to a softening of beer volumes compared to its expectations for the year.

The company said in its first half financial results that beer performance was also affected by the short supply of Mosi and Castle 375ml, which resulted from the delay in the commissioning of the new Ndola pack aging line at the start of the year.

It however said volume performance for both beer and soft drinks has shown significant growth in 2012, with beer growing by 13% and soft drinks by 22%.

It said Soft drinks have continued to benefit from focused execution and the price roll back which was extended to 500ml in late March, as a result of the Government’s decision to remove excise duty from locally produced soft drinks.

The firm said revenue and gross margin are up on prior year mainly due to the volume performance.

The strong growth against prior year on gross margin also reflects the cost savings on Ndola production at the new brewery and the local sourcing initiative on pre forms for soft drinks.

As a result of the strong volume performance and its fixed costs controls, Zambian Breweries’ operating profit ended K35.8m ahead of prior year for the six months to 30 September 2013.

“Improved cash flow generation has enabled us to reduce our syndicated loan draw down to 247 million in the period, allowing us to yield a 9% interest savings on prior year. We are pleased to report that Profit After Tax grew by 58% on prior year for the six month period,” the firm reported.

It said, “In spite of the increase in the cost of doing business emanating from the removal of fuel subsidy, we generally maintained the prices of our beverage products through enhancements in our operating efficiencies. We believe that correct pricing is a key consideration for our consumers and our intention is to continue making these products more accessible to the man on the street.”

Zambian Breweries also observed that consistency and predictability of government policy remains critical as an enabler for taking long term investment decisions that will see the firm continue being the leading beverages company in Zambia.

9 COMMENTS

  1. Time for super profits at the expense of Zambians is over, govt. should continue channelling cash realized from such exploitative companies to building schools before we finally take over like in Kenya.They make and drink their own beer…

    • The article has gone over your head. Your citizens no longer have buying power because your government has sucked all the money out of their pockets. Modern economies are consumer led i.e consumers drive economic growth! Without consumer buying power demand goes down, companies don’t grow and the economy shrinks and govt taxes to build your so called schools are reduced!

  2. ZB’s Mosi Gold export is not even made with Zambian crops. Read the label. It is all imported from Germany at our expense. This company has sold its brand licenses to itself in Europe and pays itself huge license fees. The Chibuku brand license was sold to its sister company for £12, 000, 000.00 and ZB now pays Europe to trade with it. Their financial reports clearly show a rise in untaxed payments for license fees. They have everyone drinking Castle which tastes like the old Mosi while the Mosi tastes like… Clever company. They will still sell beers but do not even have to make them in Zed any more as the licenses are owned in Holland. Tell us about that not just pulling wool over eyes as you reap through tax avoidance.

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