FSDH Initial Reaction: Nigerian Breweries FY21 results 
Kindly click here to download the report.

February 18, 2022/FSDH Research

Key Performance Highlights:

• Nigerian Breweries reported a strong 29.7% YoY revenue growth to N437.3 billion in FY21. Nigeria is the group’s primary geographical segment as over 99% of the group’s sales (N437.2 billion) are made in domestic markets. The cost of sales spurted 26.8% YoY to N276.9 billion in FY21 mainly due to the increase in the prices of raw materials and consumables by 38.0% YoY. The gross margin expanded by 147 bps YoY to 36.7% in FY21. The company’s performance in 4Q was stellar as its revenue jumped 28.0% sequentially while the revenue growth was 24.3% on a YoY basis in 4Q21.
   
• Other income vaulted 458.7% YoY in FY21, primarily due to a gain recorded on right-of-use derecognition of N3.0 billion and a significant increase in income from the sale of scrap. The marketing and distribution expenses jumped 37.6% YoY to N97.3 billion in FY21, while the administrative expenses increased 36.6% YoY to N26.2 billion in FY21. The finance income grew 27.5% YoY to N314 million, while the finance costs declined 18.1% YoY to N11.1 billion in FY21, mainly due to a reduction in Interest expenses on loans and borrowings. The company incurred a Net loss on Foreign transactions of N7.0 billion, an increase of 47.6% YoY in FY21.
   
• Nigerian Breweries reported a profit before tax at N23.7 billion compared to N11.6 billion in the prior year, a jump of 104.7%. With an income tax charge of N11.0 billion this year, the group reported a net profit of N12.7 billion in FY21 as compared to N7.4 billion in FY20. Nigerian Breweries reported earnings per share of N1.57 versus N0.92 in FY20.
   
• Nigerian Breweries recorded a 24.3% YoY growth to N128.0 billion in revenue for 4Q21, compared to N103.0 billion in 4Q20. The cost of sales only grew by 3.6% YoY in 4Q21, resulting in a whopping 77.8% YoY increase in gross profit to N51.1 billion as compared to N28.7 billion in 4Q20. Furthermore, the other income skyrocketed 1441.5% YoY to N3.7 billion from N242 million in 4Q20. Net Finance cost fell 11.1% to N5.8 billion in 4Q21. The increase in revenue, other income and a less than proportionate increase in the cost of sales percolated down as the Net Profit vaulted 937.5% YoY to N4.5 billion in 4Q21 versus N429 million in 4Q20.
   
• Looking at the margins, the company’s QoQ margins expanded substantially this quarter. The company reported a gross margin of 36.7% in FY21 (+147 bps YoY, +731 bps QoQ), an operating margin of 9.5% in FY21 (+71 bps YoY, +827 bps QoQ), while the net margin came in at 2.9% (+71 bps YoY, +298 bps QoQ).
   
• The Board announced a final dividend of N1.20 per share. The final dividend will become payable on Friday, 22nd April 2022, to all shareholders registered in the company’s books at the close of business on Wednesday, 9th March 2022. The final dividend shall be paid subject to the deduction of withholding tax at the appropriate rates.

Market Reaction: Nigerian Breweries stock closed 1.05% up at N48, versus a marginal 0.08% gain for the All-Share Index (18/2).

Nigerian Breweries Earnings Highlight FY21

Source: Company Financials, FSDH