THUR, OCT 26 2023-theGBJournal|Following the economic pressures in the period, Nigerian Breweries Plc’s (NB) revenue grew slowly by 4.2% y/y in Q3-23 (9M-23: +2.1% y/y), supported by price increases (c.8.0%).
On the other hand, sales volume declined in the period. On a quarter-on-quarter basis, revenue declined by 19.3%, primarily due to the decline in volume.
The Nigerian brewer released its Q3-23 unaudited financials after close of business Wednesday which showed performance deeply impacted by seasonal fluctuations and a combination of FX illiquidity and higher borrowing costs.
The results showed a loss per share of N1.16 (vs loss per share of N0.49 in Q3-22), due to the higher net finance costs (+49.5% y/y). As a result, 9M-23 loss per share printed N6.89 (vs EPS of N1.82 in 9M-22).
For Q3-23, gross margin expanded by 236bps y/y to 32.3% (Q3-22: 30.0%), following the slower growth in cost of sales (+0.7% y/y) in the period. While awaiting further clarification from management, we believe the company’s efforts at reducing imports and shifting to locally sourced primary ingredients like sorghum, a key component in lager production, contributed to managing costs.
NB recorded an operating loss of N1.12 billion (Q3-22: N452.29 million), owing to the 12.4% y/y increase in operating expenses.
Further down, net finance charges increased by 49.5% y/y due to a 149.7% y/y rise in finance costs, offset in part by a 49.2% y/y decline in loss on foreign transactions.
The surge in finance costs resulted from increased interest expenses on loans and borrowings, particularly as total borrowings rose by 151.1% YTD to N308.00 billion.
Finally, NB recorded a pre-tax loss of N10.32 billion in Q3-23 (vs pre-tax loss of N6.60 billion in Q3-22). Following a N723.27 million tax credit in the period, the loss after tax printed lower at N9.60 billion (vs loss after tax of N3.99 billion in Q3-22).
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