BusinessDay

Nigerian Breweries’ profit surges 143% despite FX losses

Nigerian Breweries recorded an uptick in profit and revenue despite FX losses, analysis by BusinessDay shows.

The brewery company saw its profit jump 143 percent to N18.7 billion in half-year 2022 from N7.7 billion in half-year 2021.

“This is impressive, given the prevailing challenges that have resulted in an increase in the cost of doing business, especially the current FX illiquidity,” analysts at CSL Stockbrokers Limited said in a note.

Nigerian Breweries saw its cost of sales increase by 18 percent to N155.3 billion in June 2022, from N131.3 billion in June 2021.

The brewery recorded a net loss on foreign exchange transactions at N7.28 billion, an increase of 125 percent from N3.23 in half-year 2021.

However, finance costs were reduced to N3.1 billion, down 34 percent from N4.8 billion in June 2021.

Revenue climbed 31 percent to N274 billion, the highest in seven years from N209.2 billion in June 2021.

“While we are yet to confirm any further price adjustments by the company in 2022 in response to the recently introduced excise duty of N10 per litre imposed on all non-alcoholic carbonated and sweetened beverages, we believe the Revenue growth was driven largely by volume growth,” CSL report added.

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“Meanwhile, the company’s management had earlier noted their intention to pass the tax on to consumers in the most optimal way,” the report noted.

Marketing and Distribution Expenses jumped 52 percent to N70.4 billion in half-year 2022 from N46.2 billion in half-year 2021.

The brewery’s administrative expenses rose to N14.03 billion, 15 percent from N12.2 billion in the comparable period.

Finance income climbed to N228.7 million, a massive 155 percent from N89.6 million in June 2021.

“Nigerian Breweries plc retained its upbeat profit performance amidst a challenging operating cost environment in H1 2022. The brewery giant recorded revenue growth of 30 percent year on year to N274.08 billion in H1 2022 from N136.31 billion in H1 2021,” the CSL report stated.

The brewery company spent N112.1 billion on raw materials and consumables in half-year 2022, 21 percent from N92.9 billion in half-year 2021.

Loans and borrowings rose to N81.9 billion, 175 percent from N29.8 billion in June 2021.

Amortization climbed 4 percent to N772 million in half-year 2022 from N740.8 million in half-year 2021.

Cash and cash equivalents stood at N9.13 billion as of June 2022, down 41 percent from N15.4 billion as of June 2021.

Net cash in investing activities recorded -N27 billion in June 2022 from -N18 billion, indicating a negative flow year on year.

The CSL Research report also stated, “we are yet to confirm any further price adjustments by the company in 2022 in response to the recently introduced excise duty of N10 per liter imposed on all non-alcoholic carbonated and sweetened beverages, we believe the revenue growth was driven largely by volume growth.”

Nigerian Breweries Plc is one of the largest brewing companies in Nigeria. It serves the Nigerian market and West Africa.

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