How Rwanda’s Bralirwa profits raised by 655% despite COVID
Bralirwa, said its pretax profit more than tripled to 12.9 billion Rwandan francs ($12.98 million) in 2020, boosted by higher beer sales and lower operating costs.
Annual profits for local beverages manufacturer, Bralirwa increased by 655% (after tax) in 2020 to Rwf9 billion from Rwf1.2 billion in 2019 largely driven by a reduction in operating expenses.
In 2019, profits had dropped sharply to Rwf1.2bn from Rwf7.2 billion in 2018 with an increase in operating expenses explained as the cause for the drop.
However, in 2020, despite lack of activity on the events scene and with bars closed, the volumes of beer sold increased by 7.2 percent with vending outlets including shops, supermarkets, and a few restaurants.
Soft drink sales however dropped by 19.1 percent, according to the brewer’s audited financials released Wednesday.
With that, the brewer sold 1,894,000 hectoliters in the year compared to 1,886 000 hectoliters in 2019. However, revenue dropped by 0.2 percent to Rwf 100.5Bn from Rwf 100.6Bn in the previous year.
The brewer, however, managed to cut most of the expenses including the cost of sales by 2.3 percent to Rwf 64.3Bn, selling and distribution expenses by 59 percent to Rwf3.1Bn while administrative expenses dropped by 18.9 percent to just above Rwf 10Bn.
Rwanda Revenue Authority earned Rwf 3.98Bn from the brewer compared to about Rwf1.7Bn taxes that were paid by the company in the previous year.
Merid Demissie, the Managing Director of Bralirwa said that revenue management and cost-saving initiatives had driven the performance.
Bralirwa, a listed company on Rwanda Stock Exchange, reported making investments in the brewer expansion and fermentation as well as storage tanks bringing the capital expenditure to Rwf14.6bn.
Impairment on the loan to Bramin was recorded in 2020 as the project is yet to become profitable. Bramin mechanized and Irrigated Maize farm is a joint venture between Bralirwa and Minimex, a local milling company.
Debt-wise, the total debt position of Bralirwa rose slightly to Rwf 42.6B due to bank overdrafts. However, Bralirwa paid off some of its USD denominated long-term IFC loan to bring it down to Rwf 9.2B from Rwf14.6 billion in the previous year.
Going forward, the firm cited uncertainties resulting in volatility in the global economy are expected to continue to impact African economies in the coming year.
“Our initial plan for 2021 was further top line, profit and margin growth in the context of continued outperformance of the Rwandan economy relative to the broader African region driven by new product introductions, cost management, and further debt reduction,” the company said in the financial statement.
The performance will see shareholders earn a cash dividend of Rwf8.75 per share compared to Rwf1 in 2019. Shareholders are expected to approve the payout in May this year during an Annual General Meeting with payments to be made in June.
The news of the firm’s profit excited social media with most users finding it interesting that the brewer made profits amid a pandemic when bars were closed countrywide while others joking that beer had probably been a coping mechanism for many.