Nigerian Breweries Q3 2024 – Escalating Financial Strain Dampened Revenue Growth

Event

Nigerian Breweries Plc (“the Group”) reported significant revenue growth, achieving N231.10 billion in Q3 2024, which marks an 86% year-on-year increase compared to N124.38 billion in Q3 2023. This remarkable rise can be attributed to a combination of strategic pricing, innovation, and market recovery, as articulated by management in their Q3 2024 commentary.

Outlook

We anticipate that the year-end seasonal effect will complement the current management strategy, characterised by strategic pricing, innovative product development, and volume expansion. This synergy is expected to drive revenue growth. Consequently, we have slightly adjusted our FY 2024 revenue projection to N1.00 trillion, up from N954.08 billion. However, we face a challenging outlook concerning costs (operating and non-operating), as economic indicators such as inflation and interest rates are projected to worsen. This situation is likely to contribute to a greater net loss than previously reported.

With the integration of Q3 2024 financials and factoring in expected revenue growth alongside projected improvements in non-operating activities, we adjust our fair value upward to N35.92 (previously: N29.43). At the current price of N31.90, our fair value offers a 13% total return, hence we retain our HOLD recommendation for the stock.

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Thank you.