The management of Nigerian Breweries Plc is thinking outside the box as they have expressed the intention to convert some short-term obligations into long-term debt, according to Cordros Securities Limited.
“We note that the brewer has significant exposure to foreign currency payable,” said the analysts.
Data showed Nigerian Breweries recorded a loss of N47.6 billion in the first half of 2023 from a profit after tax of N18.74 billion in the same period of 2022.
The firm’s revenue increased to N277.42 billion in H1 2023 from N274.08 billion in the same period of 2022.
Nigerian Breweries reported a loss on foreign exchange transactions which stood at N70.62 billion in the second quarter of 2023 from N5.4 billion in Q2 2022.
“The second quarter of 2023 was significantly impacted by various factors including the effect of fuel subsidy removal on consumers, naira devaluation and its effect on input cost, and mostly the revaluation of foreign exchange obligations,” Nigerian Breweries noted in a recent statement signed by Uaboi Agbebaku, company secretary/legal director.
“Together with the cash crunch which materially impacted the first quarter, the Company’s net loss was escalated in H1. Despite these challenges, we see a positive trend in the results from operating activities (operating profit) which improved by more than 100 percent in the 2nd quarter versus the same quarter in 2022, driven by pricing, premiumisation, and strong cost management.
Although the recent policy reforms are having a short-term impact on businesses and consumers, we believe they are beneficial to the long-term growth prospects of the country and the Company. The board remains committed to creating long-term sustainable value for our Shareholders,” Agbebaku stated.
Here are the highlights of Nigerian Breweries half year financial books:
Debt restructuring by tenors
The management of Nigerian Breweries Plc is thinking outside the box as they have expressed the intention to convert some short-term obligation into long-term debt, according to Cordros Securities Limited.
“We note that the brewer has significant exposure to foreign currency payable,” said the analysts.
There has been growing concern over the FX woes and mounting debts of Nigerian companies who operate in a tough and unpredictable macroeconomic environment.
Revenue/Sales
Nigerian Breweries revenue for the period stood at N277.42 billion in H1 2023 from N274.08 billion in the similar period of 2022.
“In the first half of the year (H1), net revenue grew by a low single-digit driven by pricing to partially mitigate inflation and by premiumisation. Premium beer volume was broadly stable while flavoured beer grew in the low thirties, led by Desperados, which more than doubled in volume versus the same period in 2022,” Agbebaku said.
Cost of sales
Nigerian Breweries’ cost of sales amounted to N165.09 billion in H1 2023 from N155.35 billion in the similar period of 2022.
Nigerian Breweries announces price hikes on all products in a letter seen by BusinessDay. Nigerian Breweries said the price hike became necessary due to the continued rise in input costs and the necessity to mitigate its impact.
“This is to inform you that we will review the prices of some of our SKUs (Stock Keeping Units) effective Thursday 10th August 2023. This review has become necessary because of continued rising input costs and the need to mitigate the impact,” the letter signed by Ayo Lawal, the company’s sales director said.
Loss after tax in H1
Nigerian Breweries recorded a loss after tax of N47.6 billion in H1 2023 from a profit after tax of N18.74 billion in the same period of 2022.
Cash and cash equivalent
Nigerian Breweries maintains liquidity with its cash and cash equivalent at 282.6 percent growth to N34.93 billion in H1 2023 from N9.13 billion in H1 2022.
The movement in cash and cash equivalent reveals that net cash from operating activities stood at N82.71 billion from N30.9 billion negative cash flow while net cash used in investing activities stood at a negative cash flow of N25.84 billion from N27.01 billion negative cash flow in the comparable periods.
Net cash used in financing activities increased to N121.29 billion in the first half of 2023 from N50.39 billion in the same period of 2022.
Selling, distribution & administrative expenses
Selling and distribution expenses dipped to N68.46 billion in the first half of 2023 from N69.8 billion in the similar period of 2022 while administrative expenses increased to N16.27 billion from N14.48 billion in the comparable periods.
Read also: Nigerian Breweries reports N67.8bn loss before tax in H1
Net finance cost
Nigerian Breweries net finance costs stood at N96.22 billion in the first half of 2023, an 844 percent increase from N10.19 billion in the similar period of 2022.
Finance income dropped to N185.57 million in the first half of 2023 from N228.74 million while finance costs increased to N11.15 billion from N3.14 billion.
Earnings per share
Nigerian Breweries to a loss per share of N5.73 per share in H1 2023 from an earnings per share of N2.32 per share in a similar period of 2022.
