Onome Amuge
Analysts at CardinalStone have upgraded their outlook on Nigerian Breweries Plc, citing a turnaround in profitability, improved operational efficiencies, and a more resilient balance sheet after a bruising year for the consumer goods sector.
In a note published on August 21 titled “Nigerian Breweries Plc: Pricing in the Recovery,” the investment firm assigned a “buy” rating to the brewer, setting a target price of N80.62 per share compared to a reference price of N68.30,implying an 18 per cent upside.
The recommendation comes as Nigerian Breweries, a subsidiary of Dutch multinational Heineken, posts one of the sharpest reversals in earnings performance among Nigeria’s listed consumer companies.
The brewer, which struggled through foreign exchange volatility and soaring costs in 2024, reported earnings per share of N2.85 in the first half of 2025, compared to a loss of N8.28 a year earlier. Pre-tax profit in the first quarter alone swung to N69.9 billion from a N65.5 billion loss in the prior year, largely on the back of reduced FX losses and improved cost control.
CardinalStone expects revenue to rise to N1.51 trillion in 2025, up from N1.08 trillion last year, supported by festive season demand, product innovation and management’s push to defend its market-leading position. A new 45cl Heineken pack, designed to balance affordability with premium positioning, is seen as central to driving volume growth in a competitive beer market still grappling with squeezed consumer incomes.
The analysts also observed gains in efficiency. The company’s cost-to-sales ratio fell to 57.9 per cent in H1 2025, down from 66.7 per cent in the same period last year and well below its five-year average of 64.9 per cent. Gross margin forecasts have been revised up to 42.5 per cent from 39 per cent, while EBIT margin is now seen at 20.2 per cent, in line with first-half performance.
Management has credited easing inflation, a more stable naira and cost-saving initiatives for the improvements. These include a gradual shift from gas to solar energy across its breweries and greater local sourcing of raw materials, with nearly all packaging now manufactured in Nigeria. Further efficiencies are expected from streamlining distribution, a move aimed at cutting logistics costs in one of the country’s most challenging operating environments.
The group’s balance sheet has also strengthened significantly. A rights issue completed in 2024 boosted parent company Heineken N.V.’s stake to 72.9 per cent from 56.7 per cent, with the proceeds used to retire dollar-denominated debt. Nigerian Breweries moved from a $217.9 million net liability in 2023 to a $42.1 million net asset in 2024, and maintained that position into 2025. The healthier balance sheet contributed to a N7.3 billion foreign exchange gain in the first half of this year.
Shares in Nigerian Breweries have reflected the turnaround. The stock has gained more than 112 per cent year-to-date, making it one of the best performers on the Nigerian Exchange in 2025. After opening the year at N32, it climbed to N77.05 in July, before pulling back to N68.10 in August. CardinalStone said it viewed the dip as a potential entry point for investors.
Nigerian Breweries’ recovery comes as rivals Guinness Nigeria and International Breweries, both subsidiaries of global brewing giants, continue to struggle with macroeconomic headwinds. Guinness Nigeria, majority-owned by Diageo, has faced declining sales in the stout segment, once its strongest revenue driver, and has been hit harder by shifts in consumer demand towards lower-priced lager and spirits. Analysts say Guinness’s reliance on imported inputs has also exposed it to currency volatility.
Meanwhile, International Breweries, controlled by AB InBev, has focused aggressively on volume growth with budget-friendly brands, but persistent losses have undermined investor confidence. The company’s balance sheet remains highly leveraged, and while it has gained market share in certain regional markets, profitability has lagged behind peers.
By contrast, Nigerian Breweries has leveraged its scale, premium brand portfolio and cost-cutting initiatives to defend margins and capitalise on a gradually improving consumer environment. CardinalStone’s note emphasised that the company’s pivot to energy savings and local sourcing gave it a structural advantage over competitors in reducing forex exposure and stabilising costs.
“The wider industry remains under strain, but Nigerian Breweries is outpacing its peers in adapting to Nigeria’s inflationary and FX-driven shocks. Its innovation strategy and balance sheet strength leave it in a better position to capture recovery in consumer spending,” the analysts wrote.
The bullish call underscores a shift in investor sentiment towards Nigeria’s consumer sector after a turbulent 2024 marked by currency instability, rising inflation and subdued household spending. While volumes across the beer market remain under pressure, analysts believe Nigerian Breweries’ cost discipline, innovation pipeline and capital structure repair leave it well positioned to weather macroeconomic volatility and extend its lead in the market.
“Operational improvements, balance sheet repair and a more stable FX backdrop are helping Nigerian Breweries reset its fundamentals. We believe the company is on course to sustain earnings momentum into the festive season, providing scope for further upside,”CardinalStone said.
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