{{East African Breweries (EABL’s) share price continued its trajectory of consistent decline ahead of the expected release of the beer maker’s annual results on Friday.}}
EABL’ share closed at Sh305, a 13% drop from Sh349, the July 30 price when the firm issued a profit warning.
A profit warning is a regulatory requirement that is issued when a company expects its earnings to drop by at least 25% of the level reported in the previous reporting period.
“EABL was amongst the top movers today, with foreign investors providing most of the demand and local investors providing supply (553,000 shares).
‘‘The brewer continued to witness a bear run easing 2.9% to Sh305,” said a market report by Standard Investment Bank.
The EABL stock has been on a gradual decline as investors factored in the impact of the profit warning, which signals a drop in the company’s generous dividends payout over the years.
“Based on our valuation, the company’s full-year dividend will probably fall to about Sh7.75 per share compared with Sh8.75 a year earlier,” said a market report by Old Mutual Securities.
EABL said that it was expecting profitability to decrease by at least 25% due to high cost of finance on the loan it took from its parent company, Diageo, to re-purchase its stake from south African brewer SABMiller.
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