Nigerian Breweries Earnings Rebound on Strong Sales, Declares 25k Dividend

Nigerian Breweries (NB) Plc reported strong earnings growth in its unaudited third quarter (Q3) 2020 results as earnings per share (EPS) grew to 17 kobo (vs -13 kobo in Q3’19).

The improvement in earnings mostly reflected a rebound in sales following the easing of lockdown restrictions and a decline in marketing and distribution costs.

NB also announced an interim dividend of 25 kobo per share, which will be paid electronically in December (1st) 2020.

Key highlights:

• Revenue soared by 25.6 percent year-on-year (YoY) to N82.2 billion (vs +11.6 percent YoY for GUINNESS) as pent up demand due to lockdown restriction in markets (such as Lagos and Oyo state) flowed back into space following the lifting of some containment measures to boost volume growth in Q3’20.

• EBITDA margin improved by 7.9 percentage points YoY to 9.1 percent. The improvement reflected the knock-on effect of top-line growth and reductions in marketing and distribution expenses and repairs and maintenance costs.

• Net finance costs jumped by 66.1 percent YoY to N4.8 billion in Q3’20 as a result of a significant increase in short term debt. For instance, bank overdraft and short term loans surged by 161.6 percent YoY in the nine months 9M’2020 period. (vs 85.1% YoY as at H1’20)

• Despite higher receivables, NB boasts a healthy cash balance of N53.7 billion buoyed by proceeds from loans and borrowing (9M’20: N132.3 billion; FY’19: 120.1 billion) as well as earnings pass-through to net operating cash.

• The company may be looking to ramp up capacity in the near term as capital expenditure commitments for property plant and equipment (PPE) amounted to N60 billion at the end of the quarter (30th September 2019: N30 billion).