Culled—-Proshare
October 30, 2020
by CardinalStone Research
Nigerian Breweries Plc (NB: TP – N33.35: SELL) reported strong earnings growth in its unaudited Q3’20 results as EPS grew to 17 kobo (vs -13 kobo in Q3’19). The improvement in earnings mostly reflected a rebound in sales following the easing of lockdown restrictions and a decline in marketing & distribution costs. NB also announced an interim dividend of 25 kobo per share, which will be paid electronically in December (1st) 2020.
Key Highlights:
Revenue soared by 25.6% YoY to N82.2 billion (vs +11.6% YoY for GUINNESS) as pent up demand due to lockdown restriction in markets (such as Lagos and Oyo state) flowed back into space following the lifting of some containment measures to boost volume growth in Q3’20.
EBITDA margin improved by 7.9 ppts YoY to 9.1%. The improvement reflected the knock-on effect of top-line growth and reductions in marketing & distribution expenses and repairs & maintenance costs.
Net finance costs jumped by 66.1% YoY to N4.8 billion in Q3’20 as a result of a significant increase in short term debt. For context, bank overdraft and short term loans surged by 161.6% YoY in 9M’20 (vs 85.1% YoY as at H1’20).
Despite higher receivables, NB boasts a healthy cash balance of N53.7 billion buoyed by proceeds from loans and borrowing (9M’20: N132.3 billion; FY’19: 120.1 billion) as well as earnings passthrough to net operating cash.
Though NB’s investment in plant and equipment marginally declined (-2.7% YoY as at 9M’20), the company may be looking to ramp up capacity in the near term as capital expenditure commitments for PPE amounted to N60 billion at the end of the quarter (30th September 2019: N30 billion).
