Nigerian Breweries Reports Reduced Profits for First Three Months of 2020

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 2020 to the investing public on Wednesday, 22nd April 2020.

The brewer announced a 31.4% YoY plunge in earnings to N5.5 billion in its Q1’20 unaudited results. The numbers suggest weaker cost efficiency and pressured operating cash flow.

The company in Q1 2020 recorded a decrease of 27.8% and 31.4% in Profit Before Tax (PBT) and Profit After Tax (PAT) respectively, with PBT declining from ₦11.46 billion to ₦8.28 billion and PAT declining from ₦8.03 billion to ₦5.05 billion.

NBPlc reported a 22.4% YoY plunge in core operating earnings to N10.9 billion in Q1’20, following significant increases in marketing & distribution expense (+13.5% YoY) and administrative spend (+16.1% YoY). We believe the high marketing expense reflects increasing promotional intensity in the breweries market.

The effective tax rate was also 3.5ppts higher YoY in the quarter.

A closer look at the result by Brand Spur revealed that the cash generated from operations plunged by 61.9% YoY to N4.4 billion in Q1’20, largely reflecting weak working capital management.

Notably, the company experienced significant expansions in changes in trade & other receivables and prepayment in the review period Pressure on net operating cash flow was further compounded by a 24.0% YoY increase in Value Added Tax (VAT) in the quarter.

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NBPlc was able to keep revenue and cost of goods sold largely steady despite COVID-19 induced crisis in the latter part of the quarter. Specifically, Gross profit margin only contracted by 19bps YoY in Q1’20.

Despite the over four-fold YoY jump in non-current borrowing, finance cost remained largely subdued (+1.5% YoY) in the review period. The overall moderation in yield environment and a cutback in short term borrowings may have reduced finance cost pressures for the business.

Consequent to the above, Investors earning’s an indicator (Earnings per Share) decreased to 69 kobo from N1 in Q1 2019.


The COVID-19 crisis continues to impact all businesses, with the effect expected to be
more pronounced in the future. The priority for us is to protect the health, safety and
welfare of our employees, customers, and partners, as well as support the Government
and its agencies as they work to reduce the impact of the outbreak. At this stage, it is
not possible to determine the financial impact of COVID-19 on our Company given the lack of visibility on the end date of the pandemic or on how long it would continue to impact the Nigerian economy. The Company has a strong Balance Sheet and the Board and Management are focusing on efforts to mitigate the impact on our business.