October 31, 2024/CSL Research
International Breweries’ 9M 2024 numbers showed a substantial Revenue growth of 86.9% y/y to N343.45bn from N183.8bn (9M 2023). On a q/q basis, Revenue was up marginally by 0.2% to N120.25bn from N119.98bn in Q1 2024. The topline growth seen was mainly driven by c.23.5% price increase across all the product segments of the business, which was essential to maintain pressured margins.
A steep rise in raw material and overhead costs led to a significant increase in Cost of Sales (excluding depreciation), which grew faster than Revenue. Y/y, Cost of Sales increased by 110%, reaching N224.33bn in 9M 2024, up from N106.82bn in 9M 2023. This resulted in a 7.2 percentage point decline in Gross Margin, down to 34.7% from 41.9% a year prior. Nevertheless, Gross Profit rose by 54.8% to N119.1bn from N76.96bn in 9M 2023. On a quarterly basis, Gross Profit declined slightly by 2.1%, falling to N40.91bn in Q3 2024 from N41.79bn in Q2 2024
Driven by the high-cost business environment, Operating Expense (ex-depreciation) which includes Admin, Marketing and Promotion Expense was up 37.9%% y/y, reaching N62.92bn from N45.2bn in 9M 2023. IntBrew recorded Other Income (from scrap sales, sundry & royalty) of N7.72bn compared with N2.65bn in 9M 2023, which supported an increase in the Operating Profit to N29.9bn compared with N6.42bn in 9M 2023. However, Operating profit declined by 29.6% to N7.46bn from N10.59bn in Q2 2024.
In the first nine months of 2024, the company’s Finance Income declined slightly by 10.6% y/y to N7.95bn, down from N8.89bn in the same period of 2023. Meanwhile, Finance Costs rose significantly, up 85.5% to N37.1bn from N19.99bn in 9M 2023. Following the full repayment of foreign loans and borrowings (equivalent to US$342m or N474.88bn), the company’s FX exposure was minimal in Q3, with a net FX loss of N13.3bn compared to N49.56bn in Q2. Total FX losses for 9M 2024 amounted to N155.3bn, up from N38.83bn in 9M 2023.
Notably, following the completion of the rights issue, Streatley Limited (8.49%), Brauhaase International Management GMBH (1.41%), and AB InBev Nigeria Holding BV (87.54%) now collectively hold a 97.44% stake, up from 87.29% before the rights issue. This leaves only 2.29% of shares as free float on the exchange.
In summary, the company reported Pre-tax loss of N154.55bn compared with a loss of N43.52bn in 9M 2023. Q3 Pre-tax loss was N4.32bn compared with a loss of N60.9bn in Q2.
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 Brewery 9M 2024 Quick Take.pdf
