Nigerian Breweries Plc FY’19 – Moderating Interest Rate Could Offset Current Finance Expense Pressures

Nigerian Breweries Plc FY'19 - Moderating Interest Rate Could Offset Current Finance Expense Pressures

Must Read

List of Guaranty Trust Bank Sort Codes & Branches (with addresses) in Nigeria

The sort code is a number which usually identifies both the bank and the branch where an account is...

Top 10 Most Expensive Universities In Nigeria

For many Nigerians, high-quality higher education is a luxury. There are many private universities who are known not only...

List of Access Bank Sort Codes & Branches (with addresses) in Nigeria

The sort code is a number which usually identifies both the bank and the branch where an account is...
- Advertisement -
CardinalStone Research 
Nigerian Breweries Plc (NB: TP 66.68 – BUY)  released its FY’19 audited result, which revealed a 17.1% YoY decline in profit after tax to N16.1 billion (vs. our estimate of N15.5 billion). Although net cash balance also contracted by 56.8% YoY to N6.4 billion, the brewer proposed a final dividend of N1.51 per share, bringing the total dividend to N2.01 (vs. N2.33 in FY’18) with a dividend yield at 3.9%.
Some positives
  • Amidst a strong double-digit inflation environment, NB was able to reduce the cost of sales and administrative expenses by 2.9% YoY and 6.9% YoY respectively to N191.8 billion and N19.4 billion apiece. Notably, the moderation in administrative expense reflected declines in employee benefits such as salaries & wages and transportation allocations.
  • The company recorded N2.7 billion in origination and reversal of temporary differences that reduced the effective tax rate to 31.0% in FY’19 compared to 33.9% in FY’18.
  • Net operating cash flow improved by N8.4 billion YoY to N38.7 billion in FY’19. On this front, we note improvements in the management of working capital (particularly with respect to trade and other receivables).
  • Management maintained CAPEX intensity at FY’18 levels of 9.3% in FY’19, highlighting its intention to maintain market dominance.
  • NB is in the market to raise N45.0 billion as part of its N100.0 billion Commercial Paper (CP) program. This move is likely to result in a reduction in the effective interest rate in the current financial year given current yield levels.
Some concerns
  • Aggressive competition and sin taxes continued to mute growth in revenue in FY’19 (-0.4% YoY at N323.0 billion). FY’19 revenue is largely in line with our forecast of N329.8 billion.
  • Marketing and distribution expenses (+10.9% YoY) was pressured by advertising, sales promotion, and transportation. Although this marketing effort supported Q4’19 revenue, its impact was largely muted over the full-year period.
Read:  Ekiti State To Begin Advocacy To “Keep Girls In School” By September
- Advertisement -
Read:  Publiseer Shortlisted for Unilever Young Entrepreneurs Awards

Nigerian Breweries Plc FY'19 - Moderating Interest Rate Could Offset Current Finance Expense Pressures

Nigerian Breweries Plc FY'19 - Moderating Interest Rate Could Offset Current Finance Expense Pressures

- Advertisement -

Subscribe to BrandSpur Ng

Subscribe for latest updates. Signup to best of brands and business news, informed analysis and opinions among others that can propel you, your business or brand to greater heights.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Latest News

Take off to Strategy 2025 goals: DHL Express upgrades its fleet with six new Boeing 777 Freighters this year

First delivery of 2020 batch accomplished, recent 777F touched down at its operational home base Cincinnati last ThursdayDHL continues...

Billionaire Mai Vu Minh welcomed the assistant of Bosnia-Herzegovina President to pay an official visit to Vietnam

The visit is one of the activities of the program "Bilateral investment cooperation between SAPA Thale Group and Bosnia - Herzegovina Government and leading...

HP Nigeria Unveils HP Elite Dragonfly PC (Photos)

HP West Africa has launched the new HP Elite Dragonfly PC as part of its desire to continue driving innovation in the technology space. Speaking...

Islamic Development Bank Issues its Largest Ever Sukuk Worth US$ 2 Billion

The Islamic Development Bank (IsDB) has priced its largest Sukuk issuance ever, raising US$ 2 billion in 5-year Trust Certificates under its US$ 25...
%d bloggers like this: