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National Breweries in K170m operational loss

  • 1 October 2020
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BUUMBA CHIMBULU writes

NATIONAL Breweries Plc has posted an operating loss of K170 million for the fifteen months ended March 31, 2019, as the company formulates a Covid-19 response plan to ensure business continuity.

The business reported an operating loss of K70 million against an operating loss of K22 million for the fifteen months ended March 31, 2019, according to abridged financial statement posted on Lusaka Securities Exchange (LuSE).

National Breweries Plc company secretary, Vongai Chiwaridzo, said the company was committed to reverse the trends in the short to medium term.

“In the short term, we are focused on finding ways to keep the business going forward in the face of the Covid-19 pandemic.

“To this end we have formulated a Covid-19 response plan which is not only intended to ensure business continuity but also to enhance the safety of our staff at all our production facilities,” Ms Chiwaridzo said.

She said the business faced significant headwinds during the financial year under review, stating that high levels of inflation triggered widespread escalation in local costs, while the softening exchange rate led to substantial increase in prices of imported packaging materials and other outputs.

Ms Chiwaridzo explained that Maize which was the key brewing raw material was in short supply during the year driving up the cost per tonne by 92 per cent on prior year.

“These inflationary conditions eroded discretionary income and precipitated a significant reduction in volumes,” she said.

During the period under review, Ms Chiwaridzo said the packaged traditional beer segment also came under immense pressure from keenly priced affordable clear beer offerings.

This was coupled with the increased presence of illicit spirits and the continued trade in bulk traditional beer in violation of legislation prohibiting the sale of beer in this format.

She said in the face of the foregoing cost pressures the company effected a modest increase in wholesale prices which resulted in depressed sales by 27 per cent compared to the previous year.

“As volumes continued to decline price roll backs were implemented in the final quarter of the financial year and these resulted in a steady recovery of volumes. We expect this recovery to continue into the next financial year,” Ms Chiwaridzo said.

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