Event

In Q2 2024, Nigerian breweries Plc (“the Group”) reported a revenue surge of 64% to N252.65 billion (Q2 2023: N154.11 billion). According to management, this growth was driven by a synergistic blend of strategic pricing, innovation, volume growth, and market recovery.

On the cost front, cost of goods grew at a faster pace, escalating by 104% to N174.84 billion (Q2 2023: N85.66 billion), fueled by Naira depreciation and sticky inflation. The inability of the Group’s revenue to sufficiently cover the input cost incurred led to a slump in gross margin, declining by 1300 basis points to 31% (Q2 2023: 44%), despite gross profit climbing by 14%.

Corporate Action

During the quarter, the Group announced the completion of its acquisition of an 80% majority stake in Distell Wines and Spirits Nigeria Limited (Distell Nigeria). According to the Managing Director of Nigerian Breweries Plc, the acquisition and subsequent commencement of business operations align with the Group’s strategic objective to expand its current product offerings beyond beer to include wines, spirits, and flavored alcoholic beverages.

Additionally, the NGX has approved the Group’s N600 billion rights issue. This measure, necessitated by the net loss in 2023, will enable the Group to restore its balance sheet to a healthy position and reduce its debt burden.

Outlook

We anticipate sustained revenue growth for the rest of the 2024 fiscal year. While the Q2 2024 volume growth as highlighted by management is noteworthy, we foresee that higher pricing will remain the engine of growth for the Group in the year.

Looking ahead, we remain optimistic about the Group’s strategic expansion beyond beer. The recent acquisition is poised to deliver significant value.

Please follow the link “Nigerian Breweries Q2 2024 – Cost Pressures Persist” to view the whole report.                               

Thank you.