Champ Malta producer Champion Breweries profits fall 7% on rising costs

NIGERIA – Champion Breweries plc, Akwa Ibom based producer of Champion lager beer and Champ Malta has recorded 6.53% decline in profit to US$223,102.93 for the half year ended June 2018 from US$238,345.99 in 2017.

According to Beverage Industry news, the decline was blamed on rising cost of selling and distribution expenses, which rose 95% in the period to US$961,698.36 especially in the second quarter when selling and distribution costs skyrocketed 127% to US$626,351.09.

Revenue declined marginally in the period by 4% to US$2.91 million from US$3.32 million in the period.

In the first quarter, revenue grew 27% to US$3.04 million, up from US$2.41 million in 2016 and in the period net profit fell due to higher production costs caused by inflation and a weakened naira.

Champion Breweries, a Heineken controlled firm said despite sales growth, cost of sales rose 46.2%.

The company has been putting in efforts to curtail its administrative and other operational costs over years and it has been able to almost half such costs.

In the middle of harsher Nigerian economic climate, initiatives included cutting on the number of employees who are paid termination benefits.

Last month, Chairman, Champion Breweries Plc, Dr Elijah Akpan said the board and management were exploring strategies that will put the company in a position to increase its stock value and eventually lead to the payout of dividends to shareholders.

Champion Breweries Plc was incorporated on 31st July 1974 as a private limited liability company, then converted to a public limited company in 1992, and listed on the NSE in 1993.

Raysun Nigeria Limited (a subsidiary of Heineken) holds 60% of the company’s issued share capital.

The brewer is battling competition with growth affected by small production line and limited distribution while competitors are either expanding their production capacity or introducing new brands.

Half year results for Nigerian Breweries show that the brewer made US$507.17mn in sales while International Breweries in its half-year results for the period ended June 2018, made US$144.11mn as revenue.

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