Nigerian Breweries’ Q3 2023 Unaudited Results Show Drastic 487.6% Decline in Profits

Nigerian Breweries Plc, a prominent player in the nation’s beverage industry, has recently unveiled its unaudited and provisional results for the third quarter ending on September 30, 2023.

The brewing giant disclosed a group loss before tax (LBT) of N78.163 billion for the third quarter of 2023.

This figure marks a sharp contrast to the N19.09 billion profit before tax (PBT) recorded in the same period in 2022. The company’s financial health plunged by 487.6 percent in the period under review.

In tandem with the substantial loss, Nigerian Breweries reported a group basic loss per share (LPS) of 689 kobo, representing a stark deviation from the 182 kobo earnings per share (EPS) reported during the third quarter of 2022. This translates to a disconcerting 478.6 percent decline in earnings per share.

These gloomy financial figures come despite the fact that Nigerian Breweries managed to increase its revenue by 2.1 percent with total revenue reaching N401.80 billion compared to N393.44 billion during the same period in 2022.

Nigerian Breweries, a subsidiary of the Netherlands-based Heineken N.V., finds itself in a challenging economic climate. Heineken N.V. maintains a significant 56.69 percent stake in Nigerian Breweries Plc, making it a key player in the Nigerian brewing industry.

Year-to-date, investors have seen a negative return of -7.3 percent on their investments.

This underperformance starkly contrasts with the positive return of +31.13 percent achieved by the NGX All-Share Index (ASI) year-to-date.

In response to the unsettling financial results, Nigerian Breweries’ share price has not fared well, closing lower at N38 as of Wednesday, October 25. This represents a decline from the N39 it was valued at on the previous day.

The share price’s performance has oscillated between its 52-week high of N48.85 and a low of N28.8.

The challenges faced by Nigerian Breweries reflect the broader economic landscape, and the company will undoubtedly need to navigate turbulent waters to regain its financial footing in the competitive beverage industry.

“Overall, volumes declined in the period under review due to continued high pressure on disposable income and the socio-political challenges in various parts of the country. However, flavoured beer volume increased led by Desperados,” said Uaboi G. Agbebaku, company secretary, Nigerian Breweries.

“Revenue increased by a low-single digit percentage driven by pricing to mitigate inflation. The operating profit was impacted by the lower volumes, higher input costs influenced by inflation and devaluation of the naira, and a one-off restructuring cost.

“Pricing and significant cost savings initiatives were not enough to fully mitigate rising input costs. A combination of foreign exchange losses due to the devaluation of the naira and higher interest costs resulted in a net loss during the period,” Agbebaku said.