Nine things we learnt from Nigerian Breweries’ 2019 financial result

Nigerian Breweries released its 2019 audited results Friday which revealed a 17.1 percent yearly decline in profit after tax to N16.1 billion.

The profit decline will affect the dividend the Brewer will pay to shareholders. That’s after a final dividend of N1.51 per share was proposed, bringing total dividend to N2.01, 14 percent lower than the N2.33 dividend paid the previous year.

Net cash balance contracted by 56.8 percent on an annual basis to N6.4 billion.

Marketing and distribution expenses rose 10 percent due to higher costs of advertising, sales promotion, and transportation. Although this marketing effort supported revenue in the fourth quarter, its impact was largely muted over the full year period.

Cost of sales and administrative expenses fell by 2.9 percent and 6.9 percent respectively to N191.8 billion and N19.4 billion apiece, when compared to the previous year. The decline was due to reduction in employee benefits from salaries to transportation allocations.

The company recorded N2.7 billion in origination and reversal of temporary differences that reduced effective tax rate to 31.0% in 2019 compared to 33.9% in 2018.

Net operating cash flow improved by N8.4 billion on an annual basis to N38.7 billion in 2019. There were notable improvements in the management of working capital (particularly with respect to trade and other receivables).

In a sign of its intention to maintain market dominance, the Brewer also maintained its intensity on capital expenditures at 2018 levels of 9.3 percent in 2019.

NB is in the market to raise N45 billion as part of its N100 billion Commercial Paper (CP) programme. This move is likely to result in a reduction in effective interest rate in the current financial year given current yield levels.