Nigerian Breweries reports 17% decline in profits amid challenging operating environment

NIGERIA – Nigerian Breweries Plc has reported a decline in earnings on its unaudited condensed interim financial statements for the nine months period ended September 2019.

The Nigeria Stock Exchange listed company’s profit reduced by 17% from N14.8bn (US$40m) made within the first nine months of 2018 to N12.3bn (US$34m).

Profit before tax for the period declined by 23.4% to N 17.2 billion (US$47m), compared to N22.4 billion (US$61m) recorded during the three quarters of last year.

This would be the seventh consecutive quarter that the company’s profit has declined.

The company and its subsidiaries earned a gross revenue of N259.9 billion (US$718m). This indicates that there was a 1.9% increase when compared to September 2018 revenue of N255 billion (US$705m).

Net income for the period, however, decreased slightly by 1% to N235.7 billion (US$649m) down from N238 billion (US$658m) during the comparable period in 2018.

The cost of sale for the period stood at N 139.5 billion (US$384m), which is a 2.6% reduction when compared to N 143.3 billion (US$395m) cost of sale expense of 2018.

Meanwhile, marketing and distribution expenses for the period stood at N57.4 billion (US$157m) compared to N51.4 billion (US$141m) as at September 2018.

Administrative expenses however reduced to N 14.2 billion (US$39m) compared to N16.9 billion (US$46m) during the comparable period last year.

Declaring a loss of N1.043bn (US$2m), driven by the higher excise duty rate which rose by 31% in Q3, the company said it paid N24.2bn (US$66m) in excise duty in the nine months to the end of September.

The new excise duty rate came into effect on 4 June 2018.

With the ongoing plans by the Federal Government to raise the Value Added Tax (VAT) rate from 5% to 7.5% some industry players speculate it will have an effect on businesses in the country such as increase the cost of doing business and further reduce the disposable income of Nigerians.

Competition in the lager segment also impacted the brewer’s earnings.

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