Nigeria: Nigerian Breweries posts 25.6% increase in third quarter revenue

Nigerian Breweries (NB), the country’s biggest beer maker by market share, posted a 25.6 percent increase in revenue in third quarter (July to September) at N82.2 billion up from N65.48 billion in the same period in 2019, TheCable reported on October 31.

For the period under review, revenue was largely driven by a strong recovery in volumes following the gradual reopening of on trade channels across the nation after COVID-19 restrictions.

Cost of sales increased 25.53 percent to N51.42 billion from N40.96 billion, leaving gross profit at N30.80 billion from N24.52 billion.

Marketing and distribution expenses reduced slightly by 7.7 percent at N17.81 billion from N19.31 billion.

This is indicative of the plan by Heineken NV, NB’s parent company, to implement cost mitigation actions across all its local operating companies, which involves “reducing all discretionary expenses while providing sufficient support behind its brands and route to markets”.

Administrative expenses increased to N5.79 billion from N4.84 billion in 2019.

Net finance cost was up 66.1 percent year-on-year to hit a record high of N4.81 billion, as finance costs surged by 67.5 percent year-on-year — following NB’s N90 billion commercial paper issuances in February (N52.76 billion) and April (N37.36 billion) of this year.

Operating profit surged 948.9 percent year-on-year to N7.44 billion due to the growth in gross profit at 25.6 percent year-on-year and a reduction in operating expenses at 2.3 percent.

In its Q3-20 trading update released two days ago, Heineken NV said: “Nigeria’s beer volume grew in the high-teens, ahead of the market. The non-alcoholic portfolio grew in the mid-twenties and the premium portfolio grew by more than half.”

To reward its shareholders, NB proposed an interim dividend of N0.25 per share, implying a dividend yield of 0.5 percent on the last closing price of N52 per share.

Shares of Nigerian Breweries have lost 11.86 percent in value in 2020, and traded at N52 as of October 28.

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