---
title: "Diageo East Africa’s Unit Reports Lower Profit for Second Year"
type: "News"
locale: "zh-HK"
url: "https://longbridge.com/zh-HK/news/210178995.md"
description: "East African Breweries Plc's annual profit dropped for a second year due to higher financing charges and disruptions in its biggest market, Kenya. The company's net revenue increased by 13%, but floods, social unrest, and constrained consumer finances affected demand. Rising interest rates and currency devaluation also contributed to the challenges. The surge in finance costs is expected to continue unless revenues grow significantly. AIB-AXYS Africa set a one-year price target for EABL, which has outperformed the Nairobi Securities Exchange all-share index."
datetime: "2024-07-30T08:26:42.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/210178995.md)
  - [en](https://longbridge.com/en/news/210178995.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/210178995.md)
---

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# Diageo East Africa’s Unit Reports Lower Profit for Second Year

East African Breweries Plc’s annual profit dropped for a second straight year as financing charges ballooned by nearly 50%.

The Kenya-based unit of Diageo Plc profit for the year through June 30 of 10.87 billion shillings ($83 million), a fall of 12%, even as net revenue climbed by 13%. Group volumes increased by only 1% from a year earlier.

Floods and social unrest in its biggest market Kenya disrupted the brewer’s operations in the financial year, and constrained consumer finances curbed demand or forced customers to buy lower-priced drinks, the company said in a filing on Tuesday. The macro environment was further complicated by rising interest rates and currency devaluation and these economic conditions led consumers to the illicit alcohol market, EABL said.

The surge in EABL’s finance costs is reflective of market conditions of rising interest rates, said , a senior research analyst at Nairobi-based AIB-AXYS Africa.

“Financing the net working capital requirements has come at a huge cost for the group,” Chokaa said. “If revenues don’t grow as fast to make up for the surge in finance costs, it appears like this is the new normal going forward.”

AIB-AXYS set a one-year EABL price target of 165 shillings earlier this month. The stock has surged 32% since the beginning of this year to 151 shillings by close of Monday trading in Nairobi. Its share price has outperformed the Nairobi Securities Exchange all-share index, which has jumped 13% during the period.

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