July 30, 2024/CSL Research

International Breweries’ H1 2024 unaudited numbers showed double-digit Revenue growth of 92.2% y/y to N223.2bn from N116.13bn (H1 2023). On a q/q basis, Revenue was up 16.2% to N119.98bn from N103.22bn (Q1 2024). We believe the topline growth was mainly driven by the c.23.5% price increase across all the product segments of the business.

A steep rise in raw materials and overhead costs caused a significant rise in Cost of Sales (ex-depreciation), which was up 82.5% y/y to N144.99bn from N79.43bn (H1 2023). Despite the significant rise in Cost of Sales, Gross Margin improved to 35% from 31.6% (H1 2023), with Gross Profit reaching N78.2bn, a 113.1% increase from N36.7bn in H1 2023. Q/q, Gross Profit also grew 14.8% rise to N41.79bn from N36.41bn in Q1 2024.

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Driven by the high-cost business environment, Operating Expense (ex-depreciation) which includes Admin, Marketing and Promotion Expense was up 140.7% y/y, reaching N41.5bn from N17.24bn in H1 2023. IntBrew recorded Other Income (from Scrap sales, sundry & royalty) of N7.99bn compared with N705m in H1 2023, which supported an increase in the Operating Profit to N22.45bn compared with N1.89bn in H1 2023.

In the first half of 2024, the company’s Finance Income declined by 58.7% y/y to N2.66 billion from N6.43 billion in the same period of 2023. Conversely, Finance Costs increased significantly by 153.1%, rising to N33.34 billion from N13.17 billion in the first half of 2023, despite the complete settlement of the company’s loans and borrowing balance of N473.89bn as reported at the close of Q1 2024 Additionally, the business reported a substantial net foreign exchange loss of N141.98 billion for H1 2024. Of this total, 75% (N106.55 billion) was realized, while the remaining 25% (N35.45 billion) was unrealized.

In summary, the company reported Pre-tax loss of N150.24bn compared with a loss of N41.43bn in H1 2023. Q2 Pre-tax loss of N60.88bn makes it the seventh consecutive loss-making quarter.

We have a Hold recommendation with a price target of N4.3/s. Current price is N4.2/s

Kindly click on the below link to download the full report.

​CSL International Breweries H1 2024 Quick Take.pdf​​​​​​​​​

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