Nigerian Breweries Plc shattered expectations in 2024 by exceeding the NGN1 trillion revenue threshold for the first time in company history. The firm posted total earnings of NGN1,084.44 billion, representing an impressive 80.85% increase compared to 2023’s NGN599.64 billion. This exceptional growth occurred despite significant economic obstacles, as the company leveraged pricing strategies, expanded into new markets that enhanced both sales volumes and pricing capabilities.

The remarkable revenue expansion was partially counterbalanced by escalating expenses. Production costs rose dramatically due to inflationary pressures and currency devaluation, consuming 70.50% of revenue in 2024, up from 64.50% in the previous year. While gross profit grew by 50.47% year-over-year to reach NGN320.00billion compared to NGN212.6 billion in 2023.Company executives specifically highlighted how currency volatility and the mid-2023 naira devaluation substantially increased operational costs across the entire beverage sector. Despite margin pressures, Nigerian Breweries significantly improved its operational performance in 2024. Operating income reached NGN69.90 billion, marking a 59.00% increase from 2023’s NGN43.96 billion. This improvement demonstrates the effectiveness of cost-cutting measures that partially offset rising expenses. Nevertheless, the operating profit margin moderated to approximately 6.40% down from 7.30% in 2023 as expenses grew faster than sales.

Net finance expenses surged by 34.00% to NGN252.82 billion in 2024, driven by elevated borrowing rates and massive foreign exchange losses following the naira’s substantial devaluation. This dramatic increase in financial costs was largely due to interest rates remaining high while the naira depreciated by approximately 41% during 2024, resulting in the company’s largest-ever foreign exchange loss, NGN157.6 billion. Moving below, the company recorded its second straight annual loss. The 2024 loss after tax amounted to NGN144.99 billion, 36.39% deeper than 2023’s NGN106.31 billion deficit.

Balance Sheet Position: Total Assets grew by 43.02% YoY, reaching NGN1,138.28 billion in 2024, compared to NGN795.87 billion in 2023. The increase was largely due to the proceeds from the rights issue that boosted the company’s liquidity and enabled it to shore up its asset base. This was further boosted by Cash and Cash Equivalents which saw a sharp increase of 280.57%, from NGN39.57 billion in 2023 to NGN150.59 billion in 2024. Meanwhile, total liabilities saw a decrease of 7.95%, falling from NGN732.59 billion in 2023 to NGN674.33 billion in 2024. This was likely a result of debt reduction using the proceeds from the rights issue, which helped ease the company’s leverage and improve its liquidity position.

Total Equity surged by 633.15%, from NGN63.28 billion in 2023 to NGN463.94 billion in 2024. This enormous increase reflects the successful completion of the rights issue that significantly enhanced shareholders’ equity. This strategic move has provided the company with much-needed capital to address its financial challenges and potentially position itself for future growth. Share Capital increased by 201.36%, from NGN5.14 billion in 2023 to NGN15.49 billion in 2024, further reflecting the impact of the rights issue. This increase in share capital helped stabilize the company’s capital structure and is expected to ease financial constraints moving forward.

Outlook: The company’s transformative NGN599.1 billion rights issue which was the largest in the country was very successful and this helped the organization to reduce its debt burden. With a stronger equity position from the rights issue, improved liquidity, and strategic cost-saving measures, the company is well-positioned for a turnaround in 2025. The organization has laid out plans for the future which include plans to reduce operating costs by optimizing its supply chain and increasing local sourcing of raw materials to mitigate FX risk. This is expected to help the company growth further as it has risen SKU prices for it products multiple times to reflect the ongoing economic situation. We hence place a BUY rating on NB as we are optimistic about the development of the organization and its intent to reduce debt burdens in the long term and hopefully go back to full production across all plants.

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