Background
Nigerian Breweries Plc, incorporated in 1946, is the pioneer and largest brewing company in Nigeria. Its first bottle of beer, STAR Lager, rolled off the bottling lines of its Lagos Brewery in June 1949.
In October 2011, Nigerian Breweries acquired majority equity interests in Sona Systems Associates Business Management Limited, (Sona Systems) and Life Breweries Limited from Heineken N.V.
This followed Heineken’s acquisition of controlling interests in five breweries in Nigeria from Sona Group in January 2011.
Nigerian Breweries has 7.56 billion shares outstanding, with shareholder funds standing at N112.35 billion at the end of December 2013.
Financial Performance for December 2013
Nigerian breweries Plc’s 31st December 2013 financial statement showed the company on the right trajectory of growth, as gross revenues rose by 6.3 percent to N268.61 billion as against N252.67 in the comparable period Q4:2012.
The company was able through effective cost control mechanism, to reduce production cost, as cost of sales were flattish at 3.87 percent at N132.14 billion FY 2013 hence gross profit increased by 8.7 percent to N136.47 billion.
Further more in the year ended December, 2013, NB increased gross margins to 50.7 percent in the review period from 49.6 percent Q4’2012.
Nigerian Breweries’ stellar performance as reported in its December 2013 results, showed profit before tax spiking by 11.9 percent to N62.24 billion Q3’ 2013 from N55.62 billion in the comparable period of 2012.
The increase in pretax was fueled by reduction in finance costs by 22.82 percent to N6.93 billion in the review period, while operating expenses increased marginally by 10.4 percent to N62.84 billion.
The increase in profitability of the company affected its net margin as it climbed to 26 percent in Q’4 2013 from 25.7 percent Q’4 2012.
What this means is that the company was able to accrue N26 to the profit position for every N100 earned in 2013, up from N25 in 2012- one of the highest in the industry.
Return on assets (ROA) followed a similar pattern. ROA for the year jumped to 17 percent from 15 percent in 2012.
This implies that every N100 worth of assets deployed contributed N17 to after-tax profit for the year, higher than the N15 recorded in 2012.
Nigerian Breweries return on equity shrank to 38 percent in 2013 from 40.8 percent in 2012 to indicate that the company contributed N38 on N100 after-tax profit in 2013.
Earnings per Share EPS in the period Q4’2013 increased to 570k compared to 503k recorded erstwhile 2012.
The debt to equity ratio reduced to 8 percent in Q4’2013 from 48 percent in Q2’ 2012.
Financial Performance Outlook
The shares of Nigerian Breweries, the most capitalized company by market value in the Fast moving consumables goods sector (FMCG), on the floor of the Nigeria Stock Exchange (NSE) increased in the past year by 10.44 percent to close at N142.5 on the February 14 2014.
The market capitalization of the company on the same day was N1.0 trillion.
The company has been increasingly giving returns to the owners as it declared a final dividend of 450k for every share held representing a payout of 79 percent of earnings.
A favorably year lies ahead of NB to consolidate on it performance as sales are expected to pick up during 2014 on the back of pre-election spending and the World Cup which is taking place in June according to FBN capital in a note released January 2014.
By: BALA AUGIE
