NIGERIA – Champion Breweries, the Nigerian based company engaged in brewing business has reported a 21% drop in profits for the first nine months of 2018 to US$330,578.52.
According to a Beverage Industry News report, profit decline accelerated in the third quarter by 40% to US$110,192.84, from US$181,818.19 in the previous year.
The drop in earnings was attributed to disappointing sales despite higher selling and distribution expense.
Net revenue declined by less than 1% in nine months to US$8.81 million, but grew by 7.5% in the third quarter to US$3.03 million while selling and distribution expenses jumped 115% in nine months to US$1.73 million, skyrocketing in the third quarter by 147% to US$779,614.34.
Champion Breweries, maker of Champion lager beer and Champ Malta 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.
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.
The decline was despite efforts to cut on its administrative and other operational costs over years including reducing the number of employees who are paid termination benefits.
In August, 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.