It’s earning season and different companies that have published their half year financial statements show mixed performance. The firms, mostly those listed on the Rwanda Stock Exchange (RSE), have something in common: they are all concerned with the continued depreciation of the Rwandan franc against the United States dollar, which they say is putting pressure on earnings. “The local currency depreciation against the US dollar continues to remain in double digit territory at 12.6% YoY, easing from the mid-teen highs of 2023. This continues to result in higher import and utility costs as a result of the widened trade deficit,” Mapula Bodibe, MTN Rwanda’s chief executive said in their latest financials. Financial statements from firms, including MTN Rwanda, Cimerwa, Equity Bank Rwanda, and Bralirwa, show both positive and negative outlooks. Below are some of half-year performance from some of the companies that have released their earnings results; MTN Rwanda Net profit declined 307.1% to -Rwf10.5 billion in half year 2024 despite a 7.5% increase in total subscribers to 7.5 million. Earnings per share dropped by 305.3% to -Rwf7.8. The firm said the bottom line impacted by a lower EBITDA and an increase in depreciation on tower leases driven by the rollout of additional sites. Earnings before interest, tax, depreciation, and amortization (EBITDA) decreased by 29% to Rwf39 billion. EBITDA margin decreased by 13.8 percentage points to 31.3%. ALSO READ: MTN blames half-year earnings loss on zero rating rules Capital expenditure (Capex) increased by 28.6% to Rwf32.8 billion. MTN said it rolled out 87 new sites across the country to enhance its capacity, coverage and modernize its network. MTN added 523 000 subscribers in total. Active mobile money subscribers sustained a growth of 15%, reaching 5.1 million subscribers. Active data subscribers rose slightly by 0.6% to 2.3 million. However, the increase in total subscribers did not reflect in voice and data revenue streams. Service revenue growth ticked up slightly by 0.8%. Voice revenue declined by 24.3%. The telco said this was due to the effects of the zero mobile termination rate (MTR) regulatory directive on interconnect revenues. The regulatory directive was introduced in August last year by Rwanda Utilities Regulatory Authority (RURA) as a temporary measure to level the playing field by promoting fair competition in the telecommunication market. Excluding the impact of zero MTR, MTN Rwanda indicated that normalised voice revenue would have been 3.2% lower, whilst overall service revenue would have increased by 8.6%. ALSO READ: MTN Rwanda explains drop in earnings, projects better growth Total revenue improved slightly by 2.2% to Rwf124.6 billion, driven by a 30.6% increase in revenue from its financial technology (fintech) business segment to Rwf53 billion. The fintech contribution to overall service revenue increased to 46.1% from 36.9% in the prior year. A continued depreciation of the Rwandan franc is also weighing heavily on the company’s earnings. Despite that, dividend payout of Rwf5.7 billion (Rwf4.24 per share) was approved during the company’s annual general meeting (AGM) on June 28 and paid on July 3, 2024. Equity Bank Rwanda Equity Bank Rwanda, the second largest commercial bank in Rwanda and a subsidiary of Kenya banking group Equity Group Holdings, showed mixed growth in the first half of 2024. Equity Group Holdings indicated in its consolidated financial statement that its Rwanda subsidiary saw a 40% improvement in revenue to Kes6 billion (approximately Rwf60.8 billion), driven by an increase in net interest income and non-funded income. Non funded income such as forex income, trade finance, and fees and commissions increased by 40% to Kes2.1 billion (approximately Rwf21.3 billion). ALSO READ: Equity Group’s half year profit jumps 12.5% Profit after tax also grew by 40% to Kes3.5 billion (approximately Rwf35.5 billion). Customer loans grew by 43% to Kes45.5 billion (approximately Rwf462 billion), while customers deposits increased by 28% to Kes77.7 billion (approximately Rwf788.6 billion) in the same period. However, net interest margin – the difference between the interest income a bank earns on its loans, investments, and other interest-earning assets and the interest it pays out to depositors and creditors – was slightly lower at 7.2% compared to 8.1% in the same period last year. Return on average assets, another key metric for earnings on assets, was lower at 4.4% compared to 4.9% in the same period last year. Cimerwa Rwanda’s largest cement manufacturer, Cimerwa, reported its nine months financials ending June 30. Profit after tax grew 22.3% to Rwf11 billion. Earnings per share improved 22.3% to Rwf16.17. Revenue remained flat at Rwf72.9 billion mainly due to a pause of production for 42 days to give room for upgrade of kilns. ALSO READ: Cimerwa investors set for Rwf13bn in interim dividend payout Total assets increased by 8.2% to Rwf115.7 billion. Cimerwa bought all assets of Prime Cement, another strategic cement producer in the country. Cash and cash equivalents stood at Rwf10.6 billion, 12% down. This was attributed to the advancement of Rwf11 billion towards expansion works at its plant. Interim dividend declared at the end of June 30 was Rwf13 billion, which translates to Rwf18.76 dividend per share. ALSO READ: Cimerwa acquires Prime Cement Bralirwa Rwanda's largest brewery company, Bralirwa, published its half year earnings in July. Net profit grew Rwf15 billion, a 15.1% increase. EBITDA margin decreased by 4.4 percentage points to 37.7%. Revenue increased by 19% to Rwf102 billion, driven by a sales volume growth of 9% in the year under review. Bralirwa's cost of sales, how much it spends on producing its products, increased by 21% to Rwf58 billion, while its earnings before interest and taxes increased to Rwf26 billion from Rwf23 billion recorded in the same period. ALSO READ: Bralirwa's net profit grew 15% in HY1 2024 Etienne Saada, Bralirwa's Managing Director, said that the increase in overall top line results was driven by improved mix and pricing strategies. “Our focus on revenue and margin growth, cost-saving initiatives and operational efficiencies, significantly enhanced our operating results, despite high input and energy cost inflation,” he noted. Selling and distribution costs increased by 23% driven by high transportation costs and commercial expenses. The company's net finance costs increased by 28% mainly due the high cost of foreign exchange, caused by the depreciation of the Rwandan Franc against major currencies. ALSO READ: Analysts upbeat on Bralirwa, set Rwf255 target BK Capital analysts have reaffirmed their “Buy” rating on Bralirwa, expressing continued confidence in Rwanda’s largest brewery as a strong investment opportunity. “Significant growth in revenue driven by sales volume and price increase is supporting operating leverage gains, with rising margins, cashflow and profitability,” they said in their 2024 half-year valuation analysis. They indicated that Braliwa’s EV/EBITDA, a measure of the company’s valuation relative to its profitability, was 0.5 times. This implies that the company is valued at 0.5 times its 2023 EBITDA. They also suggested that Bralirwa’s P/E ratio, a measure of the company's stock price relative to its earnings per share, currently stands at 6, which means its stock price is 6 times its 2023 earnings per share. In both the two metrics, they suggest that the firm is still undervalued compared to its peers in the region.
