Nigerian Breweries Posts Marginal Profit Rise in Q1

Nigerian Breweries Plc has reported a profit after tax (PAT) of N11.4 billion for the first quarter (Q1) ended March 31, 2017, showing a slight increase of nine per cent above N10.45 billion in the corresponding period of 2015.

Nigerian Breweries made the profit out of revenue of N91.29 billion for the period, which is 18 per cent higher than the N77.55 billion achieved in 2016.

Profit before tax also grew marginally by 16 per cent from N14.99 billion in 2016 to N17.43 billion in the current period, while PAT of N11.4 billion was recorded.

The company explained in a statement signed by the Com- pany Secretary/Legal Adviser, Mr. Uaboi Agbebaku, that cost of goods sold increased by 25 per cent as a result of higher input costs while results from operating activities and profit after tax grew by seven per cent and nine per cent respectively, impacted by lower net finance charges and a continued focus on its cost efficiencies.

“Revenue for the period grew by 18 per cent due to the impact of price increases implemented in 2016 to cushion the effects of the operating environment. Although the 2017 operating environment remains challenging, board is confident that the company is in good position to make the necessary adjustments to cope with the difficult operating environment,” it said.

Reacting to the results, analysts at FBN Quest the key drivers behind the solid PBT growth were sales growth of 18 per cent to N91.3 billion and a 41 per cent decline in net interest expense. “These two positives completely offset a gross margin contraction of 364bps to 44.4 per cent and an 11 per cent spike in opex. Further down the profit and loss, an increase in the effective tax rate to 34.3 per cent compared with 30.3 per cent in Q1 2016 resulted in PAT growth narrowing to 10 per cent. Sequentially, sales were flat q/q. However, PBT and PAT grew by 47 per cent quarter on quarter (q/q) and 38 per cent q/q respectively due to a combination of factors such as a gross margin expansion of 255bps q/q, a 43 per cent q/q reduction in interest expense and an eight per cent q/q decrease in opex.