Event

Nigerian Breweries (‘the Group’) faced a challenging fiscal year in 2023, beginning the year with a 10% revenue decline in Q1 2023, due to cash scarcity in the country as sales across its outlets plummeted. As it was recovering from this setback in Q2 2023, following suspension of the Naira redesign policy, the Group suffered substantial FX losses as it revalued its foreign currency liabilities in response to the floating of Naira. In addition to these, the Group’s volume remained pressured throughout the remaining quarters of the year, as customer’s purchasing power shrunk due to inflationary pressure. Overall, the Group reported a net loss for 2023.

 In light of its struggle with sales volume and escalating input costs, the Group took strategic measures in Q1 2024 by implementing strategic measures of price hikes for its products twice (February 2024 and March 2024) to safeguard its margin against significant decline. This resulted in an impressive 84% jump in revenue to N227.12billion (Q1 2023: N123.31billion).

However, the Group’s net loss worsened to N52.09billion in Q1 2024, up 386% from Q1 2023’s net loss of N10.72billion, as FX losses remained a bane in the Group’s earnings.

Outlook

The macroeconomic challenges the Group faced in the last fiscal year persist. For context, the Country’s inflation rate currently exceeds 30%, further reducing consumers’ disposable income, and dampens prospects for significant volume sales growth in the current fiscal year. Consequently, we expect price increases to drive Group’s revenue growth in 2024. However, this is expected to come at a cost as we foresee further tradeoff of sales volume following price increases. While we expect gross margin to be protected on the back of the higher pricing, we are not optimistic of a substantial increase in the Group’s margin in 2024. Overall, we project a revenue growth of 28% to N768.30billion in 2024 and a 100 basis points increase in gross margin to 36%.

Please follow the link “Nigerian Breweries FY 2023 & Q1 2024 – Potential Remains Despite Gloomy Performance” to view the whole report. 

Thank you.