August 24, 2026/CSL Report
International Breweries Plc (IB) delivered a mixed H1 2026 performance, with Revenue broadly flat at ₦342.1bn (+0.3% y/y), but there was a notable improvement in operating profitability. The key driver was an 85.4% y/y decline in FX losses to ₦1.0bn, supported by relative Naira stability and lower dollar-linked input costs. This represents a significant improvement from the FX-driven losses that weighed on earnings between 2022 and 2024.
Cost of Sales declined 13.4% y/y to ₦162.8bn, lifting Gross Profit by 17.1% to ₦179.2bn and expanding Gross Margin to 52.4% from 44.9%. EBITDA rose 15.4% y/y to ₦109.0bn, with EBITDA Margin improving to 31.9%, while Operating Profit increased 12.5% to ₦70.9bn. However, Opex remained a key pressure point, rising 19.0% y/y to ₦70.5bn amid continued domestic inflationary pressures.
Despite the stronger operating performance, higher taxation constrained earnings. PBT rose 21.6% to ₦74.8bn, but tax expense increased 80.7% to ₦36.5bn, lifting the effective tax rate to 48.8% from 32.9% in H1 2025. Consequently, Net Profit declined 7.2% to ₦38.3bn and EPS fell 4.2% to ₦0.23/s. We have cut our Revenue forecast to ₦637.6bn from ₦693.3bn and Net Profit forecast to ₦54.2bn from ₦70.2bn, reflecting weaker-than-expected revenue growth and higher tax assumptions. However, we retain a more positive view on margins as FX-related cost pressures ease. We forecast EBITDA of ₦160.4bn and EPS of ₦0.32 for FY2026, up from 153.3bn and 0.30 in FY 2025 respectively.
IB’s earnings profile has improved, however, weak revenue growth, elevated Opex and higher taxation remain key constraints. We maintain a Hold recommendation with a ₦9.71/share price target, versus ₦10.10/share currently.
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