Pandemic induced pressures sliced Nigerian Breweries’ revenue by 4.3% y/y to N337bn; declares N0.69k final dividends

• Shareholders to receive 100% dividends payout in shares or cash options

Charles Abuede

 Nigerian Breweries Plc, the foremost brewing company in Nigeria has recorded an improvement in its sales volume during the fiscal year 2020 in spite of the COVID-19 pandemic which negatively impacted businesses. Jordi Borrut Bel, Managing Director, Nigerian Breweries Plc disclosed this on Wednesday during the pre-annual general meeting media briefing of the company which held in Lagos and monitored virtually by business a.m.

Attributing the increase in sales to the company’s conscious effort, Borrut Bel stated that in the face of the pandemic and economic recession, the company’s quest for innovation, adoption of e-commerce and other digital best practices in addition to the hard work and commitment of its staff helped in driving the sales.

He added that part of the effort to include the innovation of Eco-friendly label for non–alcoholic brands; category penetration with premium propositions through the launch of the new Desperado Brand (Beer flavoured with Tequila), the launch of two new Maltina variants (Pineapple & Vanilla), change in package designs for some of our existing brands (Legend, Star Radler, Amstel Malta and Life ) to deepen consumer affinity; the introduction of new pack formats and SKU’s extension, product line extensions.

Noting further, the managing director said that innovation will remain a major driver for growth in the beer industry whilst reaffirming the company’s commitment to remaining a leader in the field as well as introducing new products and ideas to drive market demand and meet the yearning of its consumers.

He also assured stakeholders of the company’s continuous commitment towards keeping its balance sheet strong and also ensuring that health, safety and the welfare of its employees, customers and partners are protected.

Elsewhere, Marcus Alves, the Reporting & Accounting Manager at Nigerian Breweries Plc, in his presentation at the pre-annual general meeting revealed that during the fiscal 2020 operating year, Nigerian Breweries recorded a 4.3 per cent year on year surge in its revenues to N337 billion from N323 billion in 2019 despite a 9.6 per cent dip in its gross profit for the year to N118.7 billion from N131.2 billion in the previous year resulting from the pandemic induced pressures on the company.

Also, the company stated that costs of sales and total cash flow from operations were negatively affected by the foreign exchange devaluation and product pricing such as sugar during the year under review as both items saw a 13.9 per cent and 2.5 per cent to N218.4 billion and N65.1 billion respectively.

However, the impact of covid-19 caused disruption in the supply chain and resulted in restrictive measures with the company seeking ways to produce and meet its revenue targets, Nigerian Breweries had a historic second half of 2020 with a phenomenal performance in the final three months of the year. Thus, the brewer recorded a massive 17.9 per cent year on year growth in its revenue to N103 billion when compared to the N87.3 billion in the corresponding period of 2019.

The company also saw its costs on the increase marginally as its costs of goods sold during the period plunged 42.1 per cent to 74.3 billion in Q4 2020 from N52.3 billion in the same period of the prior year. Gross profit tumbled in the last quarter of 2020 by 18.1 per cent year on year to N28.7 billion from N35.1 billion during the last quarter while the companies operating profit margin declined by 458 basis points to 7.0 per cent from 11.5 per cent in the year under review.

Speaking on the company’s outlook in 202, Borrut Bel revealed that one of the growth algorithm of the brewer is to optimize the focus of its brands with a disproportionate prioritization of key regions in Nigeria.

“We want to grow revenue ahead of the market as in 2020. We want to be leaders in premium, tiger and desperado brands as we plan to initiate consumer value engineering to mitigate the impact of raw material costs. One of the growth algorithms is to review all cost lines and deliver gross savings as every naira counts. For 2021, we will strive to sustain the performance of the second half of 2020, driving premiumization and growth. However, we still expect a challenging operating environment with devaluation, forex scarcity, inflation and affordability,” he stated.

Meanwhile, the company’s dividend proposition places a 100 per cent payout ratio in the form of cash or shares as total dividend is in the tune of N7.5 billion with an interim dividend paid at N0.25k and a final dividend of N0.69k. Nigerian Breweries said the shareholders will have a choice of receiving dividends in shares at the share price of N47.57k per share or in cash and it is subject to the approval by the shareholders at the annual general meeting fixed for April 22, 2021.