International Breweries’ H1 revenue slumps on lockdown impact
International Breweries’ revenue for the three months Apri l – June showed significant decline on the back of restrictions and social gatherings.
The beer maker’s revenue tanked to N25.26billion from N33.53billion during the period under review. Cost of Sales declined N21.89billion from N27.79billion. Administrative expenses stood at N5.94billion from N27.79billion. Marketing and Distribution expenses reduced to N1.47billion from N2.96billion.
Finance Cost reduced to N1.29billion from N1.94billion. Despite, reduced sales during the lockdown loss for the period stood at N3.7billion from N2.85billion.
For the first six months of the year, revenue also reduced to N60.61billion from N68.63billion. Loss in the first half of the year stood at N9.35billion from N6.84billion.
The beer maker recently recorded 100 percent subscription in its Rights Issue. The Rights Issue is the largest equity issuance ever in the Nigerian capital market. The company raised N165 billion on the sale of 18.3 billion units of ordinary shares of 50 kobo each at N9.00 per share offered to existing shareholders through a Rights Issue in December 2019.
Prior to the rights Issue, following the completion of the merger of Intafact Beverages and Pabod Breweries with International Breweries PLC in December 2017, the beer-maker continued the construction of the Gateway Plant to address the capacity constraint that has limited its growth.
The construction of the N90 billion plant was largely financed with debt, which led to significant borrowings and altered the brewer’s capital structure from a debtto-equity perspective.
The long- time strategy by International Breweries focusing on increasing the market share ahead of bottom-line growth may have paid off as it has seen it grown market share from single-digit to double-digit, moved up as the second-largest brewer by market share in the country, displacing Diageo- owned Guinness.
However, local investors continue to worry about costrelated issues around the company with many wondering for how long deep-pocket AB Inbev-backed brewer continue to burn cash while profit drags.
In 2016, AB Inbev acquired Sabmiller worldwide and by extension, their subsidiaries in Africa. AB Inbev’s majority shareholding in Intafact Beverages Limited and Pabod Breweries Limited were merged with International Breweries PLC.
AB-INBEV, controls over 70 percent of the larger International Brewery, with direct and indirect stake of 75.1percent representing the 47.4percent held by Sabmiller Nigeria Holdings BV, and 27.7percent held by Brauhaase International Management GMBH. Also, Anambra State Government holds a 4.7percent stake in the beermaker, while minority holding amounts to 20.0percent.
Prior to the merger, International Breweries, Pabod, and Intafact had established a strong footprint in terms of mainstream value brands in the Sout-west, South-east, and South-south regions of Nigeria respectively. Therefore, the consolidation of the three subsidiaries was a strategic move by Ab-inbev to challenge the continued dominance of Nigerian Breweries Plc (NB) and Guinness in the Nigerian market.