The Namibia Breweries Limited’s (NBL) decision to move some of production processes to neighboring South Africa has adversely affected the company’s financial performance after it recorded a 0.3% drop on turnover, recorded at N$2.4 billion, according to its latest fiscal results.
The turnover dip notwithstanding, NBL recorded robust results holistically as profit after tax amassed an increment of 43.8%, while the operating profit also rose by 6.7%. An 8% increase on dividends per ordinary share was also recorded.
Speaking at the announcement of the financial results, Wessie van der Westhuizen, the Managing Director of Namibia Breweries Limited outlined contextualized the results by saying, “NBL’s solid performance was the direct result of employees taking ownership and bringing our purpose of creating a future and enhancing life to fruition. We brought a sense of urgency, speed of execution, innovation and breakthrough intent into all our conversations. These results were achieved despite continued macro-economic challenges, volume migration to South Africa and the impact of exchange rates,” he said while further attributing the results to the sufficient utilization of capacity and ensuring that the return on investment is maximized.
“NBL delivered a solid operating margin of 22% despite very strong foreign exchange fluctuations. The local beer market continues to grow and strengthen our leading competitive position, resulting in an increase of 8% from the previous year. We continuously increase our support to local procurement partners to further develop the Namibian economy and mitigate foreign exchange exposure. In light of that, we have achieved a local spend figure of 38% during the current year,” explains NBL’s Finance Director, Graeme Mouton.
“On 1st December 2015, NBL acquired 25% of the issued share capital of Sedibeng Brewing PTY Limited and an additional 9.5% of the issued share capital of DHN Drinks PTY Ltd, which is now called Heineken South Africa PTY Ltd. From 31st December 2015, Heineken South Africa PTY Ltd acquired the assets and operations of Sedibeng Brewery Pty Ltd,” Mouton said.
“Profit after tax increased by 43% mainly due to the differed tax write back in the current year. As at 1 December 2015, Heineken South Africa PTY Ltd had an unrecognized deferred tax asset amounting to N$1.6 billion. In 2013, the Group recognized a full write-down of its portion (15.5%) of the deferred tax asset in Heineken South Africa PTY Ltd amounting to N$ 188.1 million. During the current year, after the restructuring of the South African operations, the Directors consider that at the end of the year, a portion of the N$ 1.6 billion assessed loss in Heineken South Africa PTY Ltd is recoverable and have therefore included an amount of N$89.2 million, being its share of the deferred tax asset included in the Heineken South Africa PTY Ltd accounts.”
While acknowledging the arduous road that lies ahead for NBL to emulate these results given the tough economic conditions, van der Westhuizen reaffirms the organization’s commitment to delivering products that meet the ever-changing needs of the consumers. He also expects the company to reap the rewards of the recent partnership with Heineken as well as an improvement on the existing distribution networks.
“With the current water situation in Namibia, NBL will continue to execute its water mitigation plan in order to reduce dependency on public water resources, thereby contributing to the sustainability of our economy. NBL is continuously engaging with strategic partners such as Government and the City of Windhoek to find and support solutions. We have indicated our willingness to co-invest. Currently, 4.4 litres of water is used to produce one litre of beer. The 3.4 litres beyond the actual water for the product do not go to waste. The majority is reclaimed and transferred into the city’s effluent system, where it gets recycled,” van der Westhuizen concludes.