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Why Tanzanian brewer sold troubled subsidiary at $3.8mln loss?

Tanzania Breweries Limited (TBL) Plc sold its 60 percent shareholding in Darbrew Ltd, a loss-making subsidiary, at a loss of Tsh9.92 billion ($3.8 million) as part of the company's plan to cut costs and improve cash flow. Despite this, the company declared a dividend payout of Tsh537 ($0.2) per share, amounting to Tsh158.44 billion ($60.75 million) in the year ended December 31, 2024. It had not given dividend in the previous year. The brewer, listed on the Dar es Salaam Stock Exchange (DSE), said in its 2024 annual report that the sale of the subsidiary to the minority shareholders —Dar es Salaam City Council (DCC)—was completed in May 2024. Audited financial statements show that at the time of the transaction, Darbrew had a net liability of Tsh29.416 billion ($11.279 million), compared with a consideration of Tsh3 million ($1,150) that resulted in a gross loss, upon disposal, of Tsh29.413 billion ($11.278 million). The gross loss was then adjusted in relation to the subsidiary's provision utilised estimated at Tsh19.48 billion ($7.47 million), resulting in a net loss of Tsh9.92 billion ($3.8 million). TBL announced its intent to exit Darbrew Ltd in 2019 and initiated an engagement with the co-shareholder, DCC. TBL is a member of the Anheuser Busch InBev Group of companies that manufactures, sells and distributes alcoholic and non-alcoholic beverages within Tanzania and exports to neighbouring countries. TBL has a controlling interest in Tanzania Distilleries Ltd and Kibo Breweries Ltd. Last year, the company incurred capital expenditure of Tsh88.38 billion ($33.88 million) with a focus on returnable packaging and upholding facilities to sustain long-term growth. The investment included completion of the first phase of a malting facility in Kilimanjaro, which will enhance productivity and local sourcing by processing about 8,000 tonnes of barley per annum. The brewer has invested Tsh42.41 billion ($16.26 million) Kibo Breweries Ltd, which remained dormant throughout the year. © Copyright 2022 Nation Media Group. All Rights Reserved. Provided by SyndiGate Media Inc. (