NBL takes export hit
NBL said the reduction in exports, together with costs associated with reorganising and realigning the business, were the main drivers of the decline in half-year profit.
Managing director Waldemar von Lieres said the company had continued to focus on its customers and consumers despite the difficult environment.
“The resilience and relentless drive of our people, consumers and partners have enabled NBL to keep winning, delivering and transforming despite a challenging macroeconomic environment.”
Domestic market holds up
The domestic business faced a difficult trading environment, with consumers under pressure from higher fuel and diesel prices and a 3.3% increase in excise duty on alcoholic beverages from 25 February.
Namibian beer volumes fell 3.3%, but the decline was partly offset by stronger performance elsewhere in the portfolio.
Cider volumes increased 15%, with Bernini continuing to grow from a relatively small base and the launch of Bernini Mimosa adding to the range.
NBL also reported strong momentum in its non-alcoholic range, led by Windhoek Non-Alcoholic Lemon. The company's new Red Bull distribution agreement contributed to volume and revenue.
Wine volumes declined, while spirits volumes were broadly flat.
NBL said its total portfolio market share increased during the period, as it focused on affordability and relevance in response to changing consumer demand.
Costs weigh on margins
Net revenue fell 3.9% to N$2 billion, largely because of the decline in export volumes.
Operating costs fell by only 1.3% to N$1.8 billion, compared with the 3.9% decline in net revenue.
NBL said savings from lower production volumes were largely offset by higher employee-related costs, increased investment in brands and marketing, and costs related to reorganising the business for the lower export volumes expected on a sustained basis.
The result was a 20.6% decline in operating profit and a 231-basis-point reduction in the operating margin.
The company said cost normalisation was expected to support an improved cost trajectory in the second half.
Cash generation improves
Cash generated from operations before tax and dividends increased 12% to N$482 million.
The improvement was supported by working capital, particularly a substantial reduction in receivables. Trade and other receivables fell 40.6% year on year to N$416.6 million.
The stronger operating cash flow, however, did not prevent pressure on the balance sheet.
NBL paid N$432.2 million in dividends during the period, while free cash flow was N$241 million. The bank overdraft increased 60.2% to N$508.4 million.
Net debt to equity rose to 25.2%, from 21.4% a year earlier, while the current ratio fell to 0.91 times.
Capital expenditure increased to N$156 million from N$102 million, partly reflecting spending on the company's Digital Backbone enterprise resource planning programme.
Lower export base ahead
The key issue for NBL in the second half will be how the business performs after the South African export reset has been fully reflected in its results.
The company has previously communicated that the minimum supply arrangement with HEINEKEN Beverages South Africa would end in April. NBL said the first-half outcome was consistent with the downside scenarios previously communicated to the market.
Management expects the lower export volumes to be a sustained feature of the business, rather than a temporary decline.
The domestic market therefore becomes increasingly important to the group's earnings performance, alongside the company's ability to reduce costs following the restructuring of its operations.
NBL said it remained focused on “strengthening core capabilities and maintaining operational discipline” while investing in customer service and operational efficiency.
The company declared an interim dividend of 74.45 cents a share, down from 96.3 cents a year earlier. The dividend is payable on 12 November 2026.
The results are unaudited.
