Nigerian Breweries Q1’22 revenue in at respectable N137.8bn despite challenges

BY CHARLES ABUEDE

Nigerian Breweries (NB) Plc has reported a N137.8 billion first quarter 2022 revenue, representing a respectable 30.4 percent year on year growth from N105.7 billion in the corresponding period of 2021. The result is contained in the company’s unaudited financial statement filed to the Nigerian Exchange (NGX).

The robust Q1 performance, which has been achieved under a challenging business environment that has lingered for at least a couple of years, followed a price maintenance policy by the company which helped to push up volumes that beat the expectations of analysts by a wide margin.

NB Plc also produced an impressive 80.7 percent year on year growth in its profit before tax to N20.76 billion from N11.51 billion reported last year, which was driven by a 189 percent increase in financing income, as well as 85.6 percent and 51 percent moderations in the company’s income tax and finance charges.

Meanwhile, the profit after tax printed at N13.6 billion during the quarter resulting from an 85.6 percent decline in income tax while cost-efficiency helped deliver a robust gross and EBITDA margin of 45.3 percent and 23.3 percent, respectively.

However, it is projected that Nigeria’s largest alcoholic and non-alcoholic brewer will see its earnings growth take a breather in subsequent quarters over cost escalations as a result of the Russian-Ukraine conflict, which will impact its margins.

Elsewhere, the brewer’s turnover was higher by 2.8 percent. Gross margin rose by 779 basis points year on year and 637 basis points quarter on quarter to 45.3 percent in Q1 ’22 as the cost of sales surprised positively. Operating income rose by 61.9 percent year on year, while net interest expense declined by 0.5 percent year on year.

The unaudited report also showed that Nigerian Breweries’ operating expenses (Opex) increased by 55 percent year on year to N39.6 billion and, ahead of several estimates of around N37 billion, due to a 62.3 percent expansion in marketing expenses. Net loss on foreign exchange transactions was N1.9 billion, higher by 206.7 percent year on year.

Meanwhile, a peep into the company’s balance sheets shows that its short term loans and borrowings almost doubled to N43.3 billion from N24.5 billion in FY’21. Elsewhere, the company’s capital structure and balance sheet remain sturdy and overall.

A positive reaction to the result is expected from the market but with limited upside due to expected earnings pressures.