October 30, 2024/Cordros Report
International Breweries Plc (INTBREW) published their Q3-24 unaudited results this afternoon, showing an 80.5% y/y decline in standalone Q3-24 loss per share to NGN0.04 (vs loss per share of NGN0.18 in Q3-23), resulting in a 9M-24 loss per share of NGN0.67 (vs loss per share of NGN1.06 in 9M-23). The loss in the period was due to a sharp increase in the cost of sales (+84.2% y/y) and a substantial rise in net FX loss (+16.8x y/y to NGN52.60 billion).
Revenue grew strongly by 77.8% y/y in Q3-24 (9M-24: +86.9% y/y). We attribute the strong revenue performance to pricing, improved volume performance, positive brand mix and innovation. Meanwhile, revenue grew marginally by 0.2% q/q, impacted by seasonality effect.
Gross margin contracted (-256bps y/y) to 26.8% in Q3-24 (9M-24: -359bps y/y to 27.6%), as the company booked a higher cost of sales (+84.2% y/y). Elevated input and overhead costs (+88.7% y/y) drove most of the cost pressures, reflecting the impact of the high inflationary environment and currency depreciation. Accordingly, EBITDA margin narrowed (-12.59 ppts y/y) to 5.4%, further impacted by a 16.8x y/y increase in FX loss to NGN52.60 billion (Q3-23: NGN2.95 billion).
Elsewhere, the company recorded a net finance income of NGN1.53 billion (vs net finance cost of NGN4.37 billion in Q3-23), underpinned by a significant increase in finance income (+115.4% y/y) supported by a sizeable cash balance (NGN142.90 billion), alongside a decline (-44.9% y/y) in finance costs.
INTBREW’s pre-tax loss increased by 108.4% y/y to NGN4.32 billion in Q3-24 (Q3-23: NGN2.07 billion). Thus, the after-tax loss increased to NGN6.03 billion in Q3-24 (Q3-23: NGN4.95 billion) after accounting for a tax expense of NGN1.71 billion (Q3-23: NGN2.88 billion).
Revenue grew strongly by 77.8% y/y in Q3-24 (9M-24: +86.9% y/y). We attribute the strong revenue performance to pricing, improved volume performance, positive brand mix and innovation. Meanwhile, revenue grew marginally by 0.2% q/q, impacted by seasonality effect.
Gross margin contracted (-256bps y/y) to 26.8% in Q3-24 (9M-24: -359bps y/y to 27.6%), as the company booked a higher cost of sales (+84.2% y/y). Elevated input and overhead costs (+88.7% y/y) drove most of the cost pressures, reflecting the impact of the high inflationary environment and currency depreciation. Accordingly, EBITDA margin narrowed (-12.59 ppts y/y) to 5.4%, further impacted by a 16.8x y/y increase in FX loss to NGN52.60 billion (Q3-23: NGN2.95 billion).
Elsewhere, the company recorded a net finance income of NGN1.53 billion (vs net finance cost of NGN4.37 billion in Q3-23), underpinned by a significant increase in finance income (+115.4% y/y) supported by a sizeable cash balance (NGN142.90 billion), alongside a decline (-44.9% y/y) in finance costs.
INTBREW’s pre-tax loss increased by 108.4% y/y to NGN4.32 billion in Q3-24 (Q3-23: NGN2.07 billion). Thus, the after-tax loss increased to NGN6.03 billion in Q3-24 (Q3-23: NGN4.95 billion) after accounting for a tax expense of NGN1.71 billion (Q3-23: NGN2.88 billion).
Comment: Like industry peers, elevated cost pressures and FX losses overshadowed their strong revenue performance. Notably, INTBREW recorded net finance income for the first time since Q1-20 (NGN345.93 million), signalling a gradual recovery as they transitioned away from their previous debt burden after successfully repaying the USD342.00 million outstanding loan using proceeds from the recent rights issue. The loss per share also benefited from an expanded share base (9M-24: 168.29 billion | 9M-23: 26.86 billion), which mitigated the per-share impact of the higher post-tax loss for the period. Looking ahead, we expect increased pricing and improved demand during the festive season to support revenue growth in Q4-24; however, ongoing cost pressures and currency depreciation remain downside risks to earnings. Our estimates are under review.
