Nigerian Breweries profit declines by 21.3% in Q1 2019

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Nigerian Breweries Plc., a leading Consumer Goods firm specialized in the production and sales of Alcoholic & Non-alcoholic Beverages, released its first quarter result for 2019 to the investing public on Thursday, 25th April 2019.

Since the Nigerian government introduced a new excise duty regime last year, which saw a rise in tax on alcohol and tobacco, Nigerian Breweries has been struggling. This had an effect on the company’s financial statements for the year ended December 31, 2018.

On Wednesday, the brewery giant, which faces huge competition from other firms in its industry, released its financial scorecard for the first quarter of 2019.

In the period under review, the Group posted a 3.3% growth in revenue from ₦88.4 billion in Q1’18 to ₦91.4 billion but witnessed a decline in Profit After Tax (PAT) by 21.3% from ₦10.2 billion to ₦8.0 billion in Q1’19.

The decline in PAT for Q1’19 was jointly driven by a 48% surge in excise duty cost to ₦8.1 billion arising from the ₦18 per 60cl beer/stout excise duty enforced by the Federal government, a 7.29% rise in cost of sales to ₦48.2 billion, a 7.91% increase in market and distribution expenses to ₦16.6 billion and a 6.4% increase in Finance costs to 2.6 billion.

The higher excise duty erodes higher sales for the company in the period under review.  Again, over the first quarter of 2019, revenue grew 3% YoY to N91.4 billion. This reflects double-digit growth in its premium brand and beer volume. Specifically, Q1 19 trading update from its parent company guided to double-digit growth in the Heineken brand.

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In the beer segment volume grew mid-single digit during the quarter. However, following higher excise duty (+48% YoY to N8.1 billion) over the period, net revenue grew 0.4% YoY to N83.3 billion.

Consequent upon the above, the Group’s EPS fell by 21.88% to 100 Kobo in Q1’19 compared to 128 Kobo in Q1’18.

Nigerian Breweries said during the three-month period ended March 31, 2019, it acquired, plant and equipment with a cost of N7.5 billion versus N6.7 billion a year ago.