April 24, 2026/Cordros Report

International Breweries Plc (INTBREW) published its Q1-26 unaudited results, reporting EPS of NGN0.20 (-33.2% y/y). Earnings were pressured by a +263.7% y/y surge in tax expenses, alongside a sharp 81.8% y/y decline in net finance income. However, EBIT (+25.8% y/y) and PBT (+15.0% y/y) recorded solid growth, reflecting strong operating leverage, albeit dampened at the bottom line by financing and tax headwinds.
 
INTBREW revenue grew by 2.9% y/y in Q1-26 (Q1-25: +68.2% y/y), indicating fading pricing support and still-subdued volumes. The 21.1% q/q increase points to early signs of demand recovery, though largely influenced by a low base effect.
 
Gross margin expanded materially by 768bps y/y to 42.0% (Q1-25: 34.3%), driven by a 9.1% y/y decline in cost of sales. The reduction in cost of sales was primarily due to a 16.0% y/y decline in materials consumed and allocated overheads, reflecting improved cost efficiency, particularly in production inputs.
 
Below the gross line, EBIT and EBITDA margins expanded by 404bps y/y and 562bps y/y to 22.6% and 32.6%, respectively, reflecting strong operating leverage, despite a +28.9% y/y increase in OPEX. The increase in operating expenses was driven by a 37.1% y/y rise in advertising, promotion, and distribution costs, as the company intensified spend to support volumes and defend market share.
 
Net finance income declined sharply by 81.8% y/y, driven primarily by an 82.8% y/y increase in interest expense on lease liabilities. This reflects a significant build-up in lease obligations, with lease liabilities rising by 405.4% y/y to NGN18.75 billion (2025FY: NGN3.71 billion). In addition, finance income declined by 23.2% y/y, further weighing on the net finance position.
 
Overall, profit before tax grew by 15.0% y/y to NGN40.31 billion (Q1-25: NGN35.07 billion), reflecting strong operating performance. However, a 263.7% surge in income tax expenses more than offset this, resulting in a -33.2% y/y decline in profit after tax to NGN19.62 billion (Q1-25: NGN29.38 billion).
 
Comment: INTBREW’s cost optimisation efforts supported a meaningful expansion in operating profit, despite pressure from higher operating expenses. However, a surge in tax expenses, alongside a material increase in interest on lease liabilities, weighed on overall profitability. Looking ahead, we expect topline performance to be volume-led, with continued cost optimisation sustaining operating earnings. Given the likelihood that the tax spike in Q1-26 is one-off, we anticipate a normalisation of profitability in subsequent quarters, with improved earnings visibility. Our estimates are under review.