July 31, 2024/CSL Research

Nigerian Breweries’ H1 2024 financial results revealed a strong 72.9% y/y increase in Revenue, reaching N479.77bn from N277.42bn (H1 2023). Also, on a q/q basis the company’s Revenue grew by 11.2%. This new revenue milestone in H1 2024 is primarily attributed to an approximate 43% overall price increase across their widely accepted product segments, which was essential for maintaining margins.

The Cost of Sales (excluding depreciation) grew faster than Revenue, increasing by 102.8% y/y to N302.67bn from N149.22bn in H1 2023. Q/q, Cost of Sales rose by 21.3% to N165.89bn from N136.78bn. This increase was due to higher raw material costs and overheads. As a result, the Gross Margin decreased to 36.9% from 46% in H1 2023. Despite this, Gross Profit grew by 38.1% y/y to N177.1bn from N128.2bn in H1 2023.

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The high-cost business environment impacted the company’s Operating Expenses (OPEX) which grew 49.3% y/y. While Selling and Distribution Expense rose by 55.3% to N20.45bn, up from N13.2bn, Administrative Expense was up by 44.2%y/y, to N92.2bn from N63.9bn (H1 2023). Regardless, EBITDA increased by 21% y/y, reaching N61.13bn compared to N50.5bn in H1 2023.

though EBITDA margin was down 5.5ppts, settling at 12.7% from 18.2% (H1 2023). The company reported N2.69bn in other income from ancillary operation which supported Earnings Before Interest and Tax (EBIT) to reach N38.14bn from N28.38 (H1 2023).

The company’s Finance Income rose to N332m from N186m (H1 2023) as interest income on their bank deposits grew, supported by a 10.1% increase in Cash Equivalents balance to N43.57bn as of H1 2024 compared with N39.56bn at the close of 2023. However, Net Loss on Foreign Exchange Transactions grew by 31.7% to N112.27bn from N85.3bn in H1 2023. Finance Cost jumped by 281.6% to N42.54bn from N11.15bn (H1 2023) on the back of high interest payment on ballooned loans & borrowings which shot up to N588.24bn from N253.15bn (H1 2023).

Overall, the company reported Pre-tax loss of N116.34bn compared with a Pre-tax loss of N67.84bn in H1 2023.

We have a Sell recommendation on Nigerian Breweries with a price target of N23.27/s. Current Price N28.00/s

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

​CSL Nigerian Breweries – H1 2024 QuickTake.pdf​​​​​​​​​​​

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