Nigerian Breweries Plc, reported a 98.4 percent year on year (YoY) decline in profit after tax (PAT) to N83.9 million in its unaudited second quarter (Q2) 2020 results.
The weakness in earnings reflected lower quarterly sales and higher finance cost.
Revenue tumbled by 21 percent YoY to N68.6 billion in Q2’20.
The dip in revenue coincided with lockdown restrictions imposed in major beer markets (Lagos, Oyo and Abuja) in the quarter.
Those restrictions on gatherings in bars, clubs, and event centers are still mostly in place.
Gross margin declined by 6.8 percentage points YoY to 35.4 percent.
Further breakdowns showed that the margin contraction followed a milder fall in raw material cost (relative to the steep decline in sales) as well as a higher depreciation and ‘other’ expenses.
Finance costs surged by 65.6 percent YoY to N4.0 billion in Q2’20 as the company recorded higher bank overdraft and short term loan positions (+85.1% YTD).
On a positive note, Selling, General and Administrative expense (SG&A), cost was down by 23.3 percent YoY due to a reduction in marketing and distribution costs (-28.1% YoY).
Despite lower earnings and soaring receivables, Nigerian Breweries cash balance (3.4x higher YoY to N57.1 billion) improved due to higher proceeds from loans and borrowing (+133.7% YoY).