RWANDA: HIGH COSTS, DEPRECIATION AND NEW LAWS EAT INTO BRALIRWA PROFITS

Workers load Bralirwa’s products into a truck at Kafoca depot in Nyamirambo.

Rwanda's largest beer and soft drinks maker Bralirwa Ltd’s net profit fell by 14.3 per cent last year, to Rwf13.2 billion ($18.48 million) from Rwf15.5 billion ($21.7 million) in 2013 due to higher absorption costs, depreciation, increased input and finance costs.

This coupled with higher taxes on beer to its main export market, the Democratic Republic of Congo (DRC) significantly affected its profits.

The company’s revenue and sales grew marginally by 0.9 per cent and 1.9 per cent respectively in 2014 due to product mix.

“We have been investing very heavily in a market context with foreign-exchange depreciation and other pressures on the economy. It has been difficult to pass on the increase in costs. For the second year in a row no price increases were effected. This puts pressure on ratios,” Bralirwa managing director Jonathan Hall told The East African.

Bralirwa shares were trading at Rwf367 ($0.53) as of Wednesday from a peak of Rwf860 ($1.28) at the beginning of last year though this is attributed to the bonus share issued by the company last year. It has proposed a dividend payout of Rwf 7.5 ($0.01) per share unchanged from 2013.

Bralirwa’s revenues have also suffered from tough regulatory rules introduced in its previously biggest export market — the DRC — in April 2014.

READ: Bralirwa feeling effects of new beer levy by Kinshasa

This was after Congolese company Bralima Breweries, in which Heineken has a majority shares, started producing the same products. Bralima has breweries in Kinshasa, Bukavu and Kisangani in DRC.

Specifically, DRC has raised the import tariff on beer from $2.9 to $5.74 per crate and introduced a higher charge for quality standard verification, from $0.48 to $0.91 per bottle rack. As a result, the company stopped exports to eastern DRC.

“Our export volumes are significantly down because DRC was the market for the bulk of our exports – it’s more than 70 per cent down, a significant drop,” Mr Hall said.

The company has been exporting to Uganda and Burundi, but export volumes remain very low due to stiff local competition in these markets.

Bralirwa plans to raise $50 million to fund it expansion programme as it eyes the regional market amid increasing local and regional competition. It currently negotiating a $25 million loan from the International Finance Corporation.

The East African