NB plc, Guinness Nigeria win big, post strong performance

From a seemingly difficult year in 2020, no thanks to Covid-19, the Breweries industry has once again exhibited strength and sustainability. This is clearly reflected in their First quarter results in which the major brewers, the Nigerian Breweries and Guinness Nigeria showcased impressive numbers in all measurement indicators.

For instance, while the Nigerian Breweries posted a profit growth of 77 per cent in Q1, 2022, Guinness Nigeria grew its profit by 731per cent in Q3, over the figure of last year. Details show that NB PLC recorded a profit of N13.61 billion, representing a 77.71 per cent increase over the N7.6billion it achieved in 2021.

Analysts have hinged the impressive performance of the giant brewer to higher sales and increase in the price of beer and other factors which include interest made from its deposit in banks.

Accordingly also, Nigerian Breweries (NB) Plc posted a N137.8 billion first quarter 2022 revenue, representing a 30.4 percent growth from N105.7 billion in 2021.

NB Plc also recorded 80.7 percent growth in its profit before tax to N20.76 billion from N11.51 billion it achieved in the corresponding period of 2021. This, analysts say was driven by a 189 percent increase in financing income, as well as 85.6 percent and 51 percent moderations in the company’s income tax and finance charges.

The financial results showed that the company’s long-term borrowing dropped to N3.54 billion from N6.831billion in the corresponding period of 2021.

NB plc’s total assets are now at N521 billion, while net assets grew 8.18% to N185.98 billion.
Nigerian Breweries Plc had declared a dividend of N1.20 kobo for FY 2021, which was paid on April 22, 2022, while Earnings per share for the Q1 2022 period is N1.69, a 74% growth from N0.96 in Q1 2021.

The company last traded at N58.85 per share and has appreciated by 17.70% from year to date.

It operates over 10 breweries and approximately two malting plants in Aba and Kaduna. It also focuses on ancillary business, which includes manufacturing cans, labels, cartons and bottles. It also has an export business.

Guinness Nigeria

GUINNESS Nigeria, a subsidiary of Diageo Plc, and the leading total beverage alcohol company in Nigeria posted a revenue of N159,444,503 for its third quarter period ended 31 March 2022, which represents a 39 per cent growth over the same period last year.

The Company reported a Profit After Tax of N15,278, 335,000 in the period under review which represents a 731 per cent growth over same period last year.

The results show impressive performance and significant improvement when compared to the same period last year, a testament to an unwavering commitment to meeting consumer demands as well as the company’s resilience in a challenging operating environment.

Commenting on the announcement, Mr. Baker Magunda, Managing Director/CEO, Guinness Nigeria Plc said: “In the first nine months of fiscal 22, Guinness Nigeria continued to grow on the back of the strong recovery in the first half of fiscal 22. The business has delivered growth in the face of the challenging operating environment characterized by rising inflation and forex challenges in the 3 months ended 31 March 2022. Revenue grew by 39 per cent to N159.4 billion benefitting mainly from price increases across all brands, as well as from favorable brand mix and resilient consumer demand.”

The released statement revealed that Gross Profit grew 76 per cent in the period as revenues grew ahead of cost of sales. Cost of Sales increased by 24 per cent, largely due to inflationary pressure, sales volume growth, forex devaluation impacting imported materials, air freight cost increase and a shift towards more expensive can products. The Company also said that its Marketing expenses increased 68 per cent versus last year as it increased its marketing investments.

“We increased marketing investment to support our strategic growth priorities and the recovery of the on-trade. Distribution expenses also increased 36 per cent driven by higher volumes, freight and diesel inflation and extended journey time for road transportation. All of our efforts delivered an operating profit growth of 200 per cent to N22.9 billion.” Magunda explained.

‘‘We like that GUINNESS maintained resilient topline growth, reflecting positive results from a favourable product mix, increased investments in its brands, and operational efficiencies. We believe the margin expansions despite cost pressures reflect the brewer’s operational efficiencies and productivity gains. Thus, we expect the company to sustain its growth momentum in Q4-22 on the back of resilient consumer demand and improved trade outlet coverage as the brewer continues to optimize its route to consumer strategies. Overall, we believe the company remains well-positioned to maintain impressive earnings over 2022FY. Our estimates are under review.” Said Cordros analysts

Indeed, the Breweries industry has in fact latched on the size and demographic (in beer consuming age) of Nigeria’s population which remains a major attraction for brewing business to grow their top and bottom lines in recent times. But there are fears that the shrinking income of the population may pose challenges of growth to the brewing industries.
These companies achieved this in an environment of high inflation, insecurity, high unemployment and underemployment and weak economy.

However, experts believe that, “Beer is the world’s oldest alcoholic beverage. Early origins can be dated back to 6 million BC in written history of Ancient Egypt and Mesopotamia. It was largely considered a home activity until the 14th century when the world’s oldest operating commercial brewery was established in Bavaria. This was the catalyst that broke the mold from family oriented practice, to an entrepreneur’s dream. In the US, most of the major players in the market were established in the mid to late 1800’s. With an industry that has been around as long as the beer brewing industry has, it is no secret that it has reached a pinnacle. At the same time it is showing no signs of decline, therefore maturity is the proper life cycle stage for this industry”.