Diageo’s Kenyan Unit Falls to 17-Month Low on First-Half SalesEric Ombok
East African Breweries Ltd. fell for a sixth day after it reported first-half sales that were below investors’ expectations and as a Nairobi-based newspaper said the company was reducing operations at a plant.
The unit of London-based Diageo Plc plunged as much as 10 percent and traded 3.5 percent lower at 223 shillings by the close in Nairobi, the lowest since September 2012. More than 327,000 shares were traded, equal to 100 percent of the three-month daily average. The 14-day relative strength index dropped to 13, staying below the level of 30 that indicates a stock may be oversold for a ninth consecutive day.
Net income in the six months through December rose to 4.2 billion shillings ($48 million) from 4 billion shillings a year earlier, the company said Feb. 14. Sales climbed 4 percent to 31.9 billion shillings, it said. EABL cut brewing operations at its Nairobi plant to five days a week from seven days, Business Daily reported yesterday, citing Finance Director Tracey Barnes.
“The expectation was that sales would grow by 8 percent to 10 percent,” Rufus Mwanyasi, head trader at Nairobi-based Canaan Capital Ltd., said by phone. “The profit mainly came from cost cutting. The move to reduce operations is trying to cut costs because operation expenses have been going up.”
Bloomberg News received an out-of-office response to an e-mailed request for comment to Corporate Affairs Director Brenda Mbathi. A person who answered the phone at Barnes’ office said she was in meetings outside the office.
The brewer’s shares declined 14 percent in the past six days, bringing its 2014 fall to 23 percent. The FTSE NSE 25 Share Index has retreated 2.2 percent this year.
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