Champion Breweries Revenue Hits N20.9bn on Higher Sales, Price Increase

Champion Breweries Plc revenue has grown and hit N20.9 billion (USD14.1 million) in 2024, compared to N12.7 billion in 2023 due to higher volumes and upward price adjustments.

Champion Breweries Plc is majority owned by Raysun Nigeria Limited, a non-operational company. Champion Breweries operates on a much smaller scale with current installed production capacity at 500,000 hectolitres per annum (hlpa) compared to other peers that can produce more than 5 million hlpa.

Furthermore, the company has only two brands, and operations are all within the Southern region of Nigeria with around 60% of revenue generated from Akwa-Ibom state.

The company plans to ramp up capacity utilisation to 80% in 2025 (2024: 69%) and drive volumes to underpin a further growth in revenue, estimated to hit N37 billion for 2025.

While higher operating expenses, especially electricity cost, have moderated EBITDA margin in recent years, the margin is still relatively strong at 21.5% in 2024, versus 19.9% in 2023.

Champions Breweries’ major inputs, including hops and barley, are sourced from local suppliers rather than direct importation, thus hedging against foreign exchange volatilities.

Consequently, the company has remained profitable, and EBITDA margin is forecast to sustain around 20% over the next 18 months.

Leverage is a positive factor as the only debt in the books of Champion Breweries relates to lease liabilities on rented gas generator and office building.

Operating cash flow (OCF) has been supported by favourable working capital cycle because inventory is sourced from local suppliers and receivables are low.

Champions Breweries has no interest-bearing debts; therefore, EBITDA coverage of interest has remained strong at above 10x over the past five-year period to 2024.

Analysts at GCR Ratings anticipate a rise in debt given the company’s plans to obtain a N5 billion loan from Bank of Industry (BOI) to part finance the acquisition of an empty bottle inspection machine and installation of a canning line.

Liquidity assessment is underpinned by the low short term lease obligations of N191 million against the strong cash balance of N4.31 billion as of December 2024.

In addition to the expected debt of N5 billion, the company plans to raise N7.1 billion in equity via a public offer to finance the estimated capital expenditure of N9 billion.

Dividend payment is projected at N537 million in 2025 on the premise of 6kobo/share recommended by the board.

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