NIGERIA – Nigerian Breweries, subsidiary of Heineken International, has reported a 38.59% year-on-year growth in profit to N7.66 billion (US$18.7m) for the first quarter of 2021, up from the N5.53 billion (US$13.5m) reported in the corresponding quarter of 2020.

The impressive bottom-line growth can be directly linked to the 26.98% increase in net revenue, buoyed by the increase in sales during the quarter.

Its net revenue in q1 2021 was N105.68 billion (US$258.3m), up from the N83 billion (US$203.04m) it made from sales in the corresponding period of 2020.

According to the beverage maker, total volume grew in the mid-teens despite supply constraints caused by the COVID-19 pandemic.

The premium portfolio, led by Heineken and Tiger grew by more than 40%, while the low and non-alcoholic portfolio grew by more than 30%, led by Maltina.

The company’s drive to provide more product offerings in terms of size, flavour and brand-new offerings could have also been supportive of driving demand northwards.

The improvement in sales, were enough to offset the higher input costs, slight uptick in net finance cost and higher tax bill.

Cost pressures were prominent in the quarter, with gross profit margin dropping by 437bps y/y to 37.5%.

Nigerian Breweries premium portfolio grew by more than 40%, while the low and non-alcoholic portfolio grew by more than 30% in terms of volume

This was led by a 36.56% y/y rise in cost of goods sold from N48.3 billion (US$118.15m) in 2020 to N66 billion (US$161.4m), on the back of a 54.0% jump in expenses on raw materials and consumables.

It marketing, distribution and administration expenses also grew by 5.7 per cent from N24.09 billion (US$58.9m) in 2020 to N25.45 billion (US$62.25m) in 2021.

This was driven largely by the impact of heightened inflation and recent devaluation exercises.

Going down the P&L, Earnings before Interest and Tax (EBIT) saw some improvement as the company managed to keep a lid on its operating expenditures (opex).

Ultimately, Profit Before Tax rose by 39.1% y/y to N11.5billion (US$28.1m), as the aforementioned factors were enough to overshadow a 12.8% increase in net finance cost.

Going forward, the company will remain focused on its strategy to deliver sustainable growth and continue to monitor the business environment while remaining dynamic in its response to operational challenges via-a-vis the economy, particularly in the face of Covid-19 pandemic.

“Our priority remains to protect the health, safety and welfare of employees, customers and partners. For the rest of the year, we will continue to regularly monitor and evaluate the company’s financial position to ensure that our balance sheet remains strong” said company secretary/Legal Director, Nigerian Breweries Plc, UaboiAgbebaku.

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