High operating expenses, high tax eat into Nigeria Breweries’ full year profit earnings

NIGERIA – Nigerian Breweries, subsidiary of Heineken International, closed the year 2021 on a high reporting 29.7% rise in revenue in the year ended December 2021 from N337 billion (US$810m) registered the previous corresponding period to N437.19 billion (US$1.05 billion).

The growth was driven by earnings generated in the home market totalling N437.16 billion (US$1 billion) from N336.9 billion (US$809m) recorded in 2020, while sales from export dropped by 11per cent to N128.12million (US$308m).

Despite the stellar top-line performance, the company was faced with hike in costs of sales and net loss on foreign exchange transactions during the period under review.

In the year under review, Nigerian Breweries reported about 27 per cent increase in cost of sales to N276.87billion (US$665m) as against N218.36billion (US$524.97m) reported in prior year results.

Net loss on foreign exchange transactions grew significantly by 47.6per cent to N7.04billion (US$16.9m) in 2021 from N4.77billion (US$11.47m) reported in 2020 financial year.

The group’s overall operating expenses that include cost of sales, marketing & disturbing expenses, and administrative expenses rose by nearly 30 per cent to N400.42billion (US$962m) in 2021 from N308.02billion (US$740m) reported in 2020.

Meanwhile, the drinks maker recorded 38 per cent increase cost of raw materials and consumables to N197.8billion (US$475m) in 2021 from N143.39billion (US$344.7m) reported in 2020, while advertising & sales promotion grew significantly by 59 per cent to N39.5billion (US$94.96m) in 2021 from N24.9billion (US$59.8m) in 2020.

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In addition, employee benefits grew by 21 per cent to N49.61billion (US$119.2m) in 2021 from N40.98billion (US$98.5m) in 2020.

However, the company was able to drive its other income that grew significantly by 459 per cent to N4.63billion (US$11m) in 2021 from N828.1million (US$1.99m) in 2020.

The increase in other income was primarily driven by sales of scrap that moved from N729.44million (US$1.75m) in 2020 to N1.45billion (US$3.49m) in 2021, and gained N2.95billion (US$7.09m) from gain on right-of-use de-recognition in 2021.

The deprecation of Naira and double-digit inflation rate played a critical role in the company’s earning, coupled with tax expenses that nearly tripled that of 2020.

Amid the operational challenges, Nigerian Breweries, attained a profit before tax increase by 105% to N23.7billion (US$56.98m).

Meanwhile, overall profit for the year increased by 72% to N12.67billion (US$30.46m) in 2021 from N7.37billion (US$17.7m) reported in 2020.

Nigerian Breweries prides itself of having been existence for 75 years. The company is currently undertaking its palladium jubilee celebrations with a raft of activities.

As it marks 75 years of existence under the theme “75 Years of Refreshing Lives”, the beer maker has unveiled a new logo depicting a bust of excitement and youthfulness, featuring the green and white colours of the Nigerian flag, a testament of being a proudly Nigeria company.

It has a rich portfolio quality brand to include Star larger, Heineken, Amstel Malt, Ace Passion, Strongbow Apple Cider, among many others.

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