October 28, 2025/Cordros Report
We have updated our estimates for Nigerian Breweries Plc (NB) following the release of their Q3-25 results. Although topline performance remains resilient — with 9M-25 revenue up 47.2% y/y — the Q3-25 revenue came in below our expectations (variance: -9.4%), reflecting a sharper-than-assumed seasonal slowdown. As a result, we have revised our 2025E revenue forecast lower to NGN1.50 trillion (Prev.: NGN1.59 trillion) despite expectations for festive-driven volume recovery in Q4. In line with a more cautious outlook on profitability, we have also factored in the NGN6.08 billion Distell-related impairment charge in our estimates and applied a higher effective tax rate assumption (34.0% | Previous: 31.0%) consistent with the 9M-25 run-rate. These changes modestly dilute the earnings outlook, driving a downward adjustment in our target price to NGN80.17/s (Previous: NGN82.45/s). Thus, we maintain our “HOLD” rating on the stock. On our revised numbers, NB trades at 2025E EV/EBITDA and P/E multiples of 7.0x and 15.2x, respectively.
Strengthening margins cushion slower growth outlook: We maintain a constructive near-term view on NB, supported by resilient pricing and continued portfolio premiumisation. That said, we have tempered our revenue growth expectations to +38.3% y/y in 2025E (previous: +46.5% y/y) to reflect weaker-than-expected volume traction in Q3-25, competitive pricing pressures in select categories, and still-strained consumer spending. We now forecast 2025E revenue of NGN1.50 trillion (previous: NGN1.59 trillion), with growth primarily price-mix led. Over 2025–2029E, we project an average annual topline growth of 22.7%. Margin expansion remains intact as FX stability improves cost visibility and procurement efficiencies take hold. We now expect a 42.1% gross margin and 24.0% EBITDA margin in 2025E (previous: 41.1% and 23.2% | 2024FY: 29.5% and 11.9%, respectively). Incorporating the NGN6.08 billion one-off impairment charge related to Distell’s integration in our model; our revised assumptions translate to a 2025E EPS of NGN5.28 (previous: NGN5.57 | 2024FY: loss per share of NGN12.07).
Improved cost structure sustains margin recovery: NB’s gross margin continues to recover, rising to 39.7% in 9M-25 (9M-24: 29.5%), driven by sustained pricing actions and portfolio premiumisation. This has been reinforced by a leaner cost-to-sales structure, with the ratio improving to 60.3% in 9M-25 (9M-24: 70.5%) on better procurement efficiencies and a more premium-leaning product mix. We expect further easing to 57.9% in 2025E — below the 5-year historical average of 64.9% and consistent with our 5-year forward estimate of 57.4%. Accordingly, we forecast a 2025E gross margin of 42.1% (prev: 41.1%), providing a solid buffer for earnings recovery.
Valuation: Our year-end target price is NGN80.17/s, derived from an equal blend of DCF and sector-relative valuation (P/E & EV/EBITDA) estimates. Our DCF FV (NGN60.60/s) is derived from an equal blend of FCFF (TP: NGN64.55/s) and FCFE (TP: NGN56.55/s) estimates, assuming a 19.7% WACC, 20.4% CoE and a 4.0% terminal growth rate. On P/E (TP: NGN93.60/s), we utilised the 2025E Middle East & African (MEA) peer average multiple of 17.7x. For EV/EBITDA (TP: NGN105.87/s), we utilised the 2025E MEA peer average (9.3x).
