NIGERIA – Nigerian Breweries, subsidiary of Heineken International, has announced a 20.1% rise in profit in the third quarter of the 2021 financial year to N8.47 billion (US$20.49M), compared to N7.1 billion (US$17m) registered in the same period last year.
The rise in earnings was triggered by 32.1% increase in revenue to N309.22 billion (US$747m) from N234.02billion (US$566m) of the previous comparative period.
Further breakdown of the financial results showed its cost of sales rose significantly by 37.9% from N144.1 billion (US$348.5m) in 2020 to N198.74 billion (US$480m) in the period under review.
While marketing, distribution, and administration expenses also grew by 27.2% from N67.86 billion (US$164m)in 2020 to N86.32 billion (US$208.7m) in 2021.
A statement signed by the Company Secretary/Legal Director, Nigerian Breweries Plc, Uaboi Agbebaku revealed that the company remains committed to its strategy to deliver improved growth as it continues to monitor the business environment and remain dynamic in its response to challenges confronting the business as well as that of the economy, particularly in the face of COVID-19 pandemic.
Agbebaku explained that the company would continue to deploy cost-efficient measures to keep the balance sheet strong and healthy while ensuring that the health, safety and welfare of its employees, customers and partners are protected.
Guinness Nigeria turns to profitability
Meanwhile, Nigerian Breweries’ competitor Guinness Nigeria has migrated from N841.6 million (US$2.04m) losses reported in first quarter ended September 30, 2020 to profit of N4.04 billion (US$9.77m) reported in first quarter ended September 30, 2021.
The impressive performance exhibited by the subsidiary of Diageo was driven by growth in revenue that gained 58% to close Q1 2021 at N47.46 billion (US$114.8m) as against N30.02 billion (US$72.61m) revenue reported in 2020.
The revenue growth is attributed to resilient consumer demand and improved outlet coverage, as well as benefitting from headline price increases in key brands, as well as double-digit growth in local and imported spirits and the ready-to-drink category.
The unaudited results which were released to the Nigerian Exchange Group (NGX) revealed a 117% increase in gross profit in the period to N15.24billion (US$396.86m) in Q1 2021 from N7.01billion (US$16.96m) in Q1 2020, despite the impact of continued COVID-19 related restrictions and ongoing economic challenges.
Cost of sales also increased by 40%, largely due to sales volume growth, inflationary pressure, a shift towards more expensive can products and forex devaluation impacting imported materials.
Commenting on the results, Managing Director/CEO of the company, Mr. Baker Magunda said, “We are aware of the challenges in the operating environment, and regardless, our focus remains on delivering value to our stakeholders.
“This is why we continue to invest behind our strategic focus brands and categories, and to support the recovery of the on-trade, as seen in the 50% Marketing spend increase.”
The company also revealed that despite the devaluation of the naira, its net financing costs decreased by 38% as a result of reduction in the net interest cost on the back of better cash generation; and Operating profit grew 1010per cent to N6.5 billion (US$15.72m).
“As a business, we will continue to remain agile in doing business in Nigeria for the consistent delivery of growth for all stakeholders. We remain conscious of the continued challenging operating environment with double-digit inflation and pressured consumer income spending.
“However, we continue to focus on our strategy – optimising our route to consumer, innovating at scale to satisfy our consumers and improving cost control – these elements we can control,” Magunda said.