International Breweries loss shrink benefiting from cost reduction strategies

NIGERIA – Nigerian subsidiary of AB InBev, International Breweries Plc has reported a 1.53% revenue decline in the nine months ended September from the previous year’s N97.66 billion (US$256.1m) to N95.77 billion (US$251.2m).

Despite the decline in revenue, the company registered a drop in both administrative and marketing expenses which led to the shrinking of its loss before tax.

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Loss before tax stood at US$46.4m, compared with US$62.95m of the corresponding period.

During the period under review, the brewer’s administrative expenses amounted to N17.61 billion (US$46.2m), a 9.86% drop from N19.5 billion (US$51.1m)of 2019.

Its marketing expenses decreased by 28.76% to N8.42 billion (US$22m) from N11.81 billion (US$30.9m). Financing cost took a big plunge from N13.136 billion (US$34.4m) to N1.8billion (US$4.7m).

Consequently, loss before tax stood at N17.719billion (US$46.4m), compared with N24 billion (US$62.95m) of the corresponding period, while loss after tax reduced from N16.44 billion (US$43.1m) to N10.877 billion (US$28.5m) in 2020.

Unlike the first half of the year, where revenue was down 11.68%, International Breweries Plc, posted a comparatively stronger Q3, which lifted overall revenue for nine months, reports Naira Metrics.

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The upsurge in sales during the third quarter rode on the back of recovering demand for alcoholic beverages, particularly as on-trade sales channels came back on stream.

Guinness Nigeria commences the year with loss of US$2m

In 2020 most firms have generally recorded decreased revenues due to COVID-19 impact. The company’s rival, Guinness Nigeria reported 329% decline in profit after tax at N12.57bn (US$32.6m) in the full year ended June.

Its revenue decreased 21% to N104.376bn (US$270.97m) versus N131.49bn (US$341.37m) registered the prior period of 2019.

In the first quarter of 2020, the subsidiary of Diageo has reported revenue growth of 11.64% from N26.89 billion (US$70.5m) of the previous year’s corresponding period to N30.02 billion (US$78.7m).

The rise has been driven by strong double-digit growth in local and imported spirits, despite excise duty increases across the spirits category, and double-digit growth in Brand Guinness and Malta.

However, cost of sales for the three months ended September 2020 worsened by 21.1%, increasing from N18.9billion (US$49.5m) to N23.01billion (US$60.35m).

Marketing and distribution expenses, as well as administration expenses, showed marginal reduction, depicting management interest in controlling these variables.

Its loss for the opening quarter adds up to N841 million (US$2.2m), increasing by 127% from previous year’s.

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