February 17, 2025/Cordros Report
Nigerian Breweries Plc (NB) published its 2024FY audited results on Friday (14 February), reporting a loss per share of NGN12.07 (vs loss per share of NGN12.80 in 2023FY). The decline in earnings is primarily attributed to sustained cost pressures (+97.5% y/y) and foreign exchange loss (+2.8% y/y), which continued to weigh on the company’s performance.
Revenue grew by 80.8% y/y in 2024FY (2023FY: +8.9% y/y), driven by significant price increases to counter inflationary pressures and currency weakness, along with volume growth. Sequentially, net revenue grew by 65.2% q/q – reflective of the year-end celebrations and heightened consumer spending.
Gross margin printed 29.4% in 2024FY, representing a 596bps y/y decline from the 35.5% recorded in 2023FY, primarily due to elevated cost pressures. Notably, we highlight a sharp increase in the cost of sales (+97.5% y/y) relative to revenue (+80.8% y/y), driven by a 118.0% y/y surge in raw materials and consumables expenses.
Consequently, EBIT and EBITDA margins contracted to 6.4% (-89bps y/y) and 11.5% (-379bps y/y), respectively, with further pressure stemming from higher operating expenses (+46.1% y/y), amid a substantial increase in net release of expected credit loss on financial assets (+762.6% y/y to NGN4.05 billion).
Net finance charges rose by 33.6% y/y to NGN252.81 billion in 2024FY, driven by a 173.5% increase in finance cost. The rise in finance costs is largely attributed to higher interest expenses on loans and borrowings, which grew by 179.5% y/y. Notably, the company reported a foreign exchange (FX) gain of NGN2.89 billion in Q4-24 (vs FX loss of NGN66.51 billion in Q4-23) supported by the naira appreciation in Q4.
Overall, NB recorded a pre-tax loss of NGN182.92 billion in 2024FY (vs pre-tax loss of NGN145.22 billion in 2023FY). Following a tax credit of NGN38.03 billion in the period, the loss after tax came in at NGN144.88 billion (vs loss after tax of NGN106.31 billion in 2023FY).
Comment: While revenue growth was supported by higher prices and volume growth, the brewer continued to grapple with elevated inflationary pressures and naira volatility, which impacted on their margins. Looking into 2025, we expect price increases and volume gains to support NB’s revenue. Additionally, we note that the lingering cost pressures and elevated finance costs will remain significant headwinds to profitability. Our estimates are under review.
