NIGERIA – Nigerian Breweries Plc, has reported a 21.3% in net profits during its first quarter of 2019 which it attributed to the continued impact on the new excise duty that came into the effect in June last year.
The beverage manufacturer
Excise duty rate increased by 48.2% from the same period in the previous year thus cutting down N8.1bn from sales revenue as compared to US$15.27 million (N5.5bn.)
“The increase in Net Revenue was offset by higher excise duty following the excise duty regime introduced in 2018.
“Cost of Sales increased by 7.3% primarily driven by raw materials and consumables while Marketing and Distribution expenses increased 7.9% over the same period in 2018.
Administrative Expenses reduced by 12%, partially driven by the right sizing exercise undertaken by the Company in Q3, 2018,” the company said in a statement.
The effects of the excise duty had also contributed to the 41.2% decline in profits for the beverage manufacture during its 2018 financial year coupled with a decline in its revenues to US$894.77 million in 2018 from US$950.31 million in 2017.
The decision compelled the brewer to issue US$41.67 million (N15bn) Commercial Paper (CP) to support the company’s short-term funding as well as to complement other sources of working capital, while diversifying its funding sources to include non-bank investors.
Amid the struggling beverage sector, the Nigeria Stock Exchange listed firm is also set to face further competition from its rivals, Guinness Nigeria Plc and AB InBev owned International Breweries Plc.
According to a report by Beverage Industry News, the company however, said that the impact of inflation and currency devaluation was minimized by the continued focus on cost efficiencies delivered through Cost Leadership initiatives.
The company’s Secretary/ Legal Director, Uaboi Agbebaku, noted that 2019 operating environment so far, has shown similarities with the difficult environment witnessed in 2018.
Looking forward to the rest of the year, the company’s board however remains confident that it has a clear strategy to deliver good return on investment.