October 26, 2026/Cordros Report
International Breweries Plc (INTBREW) released its Q3-26 unaudited results today, reporting standalone EPS of NGN0.10 (-2.1% y/y) in the quarter, bringing 9M-26 EPS to NGN0.32 (-5.7% y/y). The decline was driven by a 39.0% y/y increase in operating expenses alongside a lower tax credit, which more than offset topline growth (+6.8% y/y), an 899bps y/y gross margin expansion to 38.9%, and a 170.2% y/y increase in net finance income. Notably, the company completed its capital reorganisation on 23 September, eliminating NGN191.03 billion of accumulated losses and distributing NGN84.00 billion (NGN0.50/share) to shareholders.
INTBREW’s revenue grew by 6.8% y/y in Q3-26 (9M-26: +2.1% y/y), returning to growth following the contraction recorded in the prior quarter. We attribute the improvement largely to the benefit of previous pricing actions, with volume recovery yet to gain meaningful traction. On a quarter-on-quarter basis, revenue declined by 14.0%, reflecting seasonal demand moderation.
Gross margin expanded by 899bps y/y to 38.9% in Q3-26 (9M-26: +655bps y/y to 40.6%), as cost of sales declined by 6.9% y/y. The decline was underpinned by lower materials consumed and allocated overheads (-14.6% y/y | 48.4% of total costs), reflecting softer input costs and a stable exchange rate during the period. Sequentially, gross margin contracted by 163bps q/q.
Conversely, EBIT margin contracted by 51bps y/y to 7.8% in Q3-26 (9M-26: +257bps y/y to 16.8%), while EBITDA margin expanded by 65bps y/y to 22.4% (9M-26: +429bps y/y to 28.9%), as OPEX rose by 39.0% y/y (9M-26: +26.1% y/y). The expansion in EBITDA margin reflects a 16.1% y/y increase in depreciation and amortisation, which outpaced revenue growth. OPEX growth was driven by higher advertising, promotion & distribution expenses (+65.2% y/y), and technical management fees (+32.4% y/y).
Below the operating line, net finance income increased by 170.2% y/y in Q3-26 (9M-26: +33.0% y/y), supported by a 94.0% y/y increase in finance income, which more than offset a 34.9% y/y rise in finance costs. The growth in finance income was supported by higher cash and cash equivalents, which rose by 18.0% y/y to NGN103.74 billion as at SEP-26, while finance costs increased on the back of higher interest expense on lease liabilities (+50.5% y/y).
Finally, profit before tax grew by 23.3% y/y in Q3-26 (9M-26: +21.9% y/y). However, profit after tax (PAT) declined by 2.1% y/y in Q3-26 (9M-26: -5.7% y/y), reflecting a smaller tax credit of NGN0.54 billion (Q3-25: NGN3.85 billion). The Q3-26 credit was driven by a rebuild in deferred tax assets to NGN11.05 billion (June 2026: NGN7.26 billion). For 9M-26, the effective tax rate increased to 39.7% (9M-25: 22.1%), although the charge was largely non-cash.
Comment: INTBREW’s Q3-26 performance reflects a return to topline growth, supported by prior pricing actions, easing input costs and stronger finance income, although elevated operating expenses and a higher tax burden weighed on earnings. The company also completed its capital reorganisation during the quarter, eliminating accumulated losses and returning capital to shareholders, which in our view provides headroom for dividend resumption. Looking ahead, we expect revenue to improve sequentially in Q4-26 on festive demand, with input costs remaining subdued. However, finance income growth should moderate following the reduction in cash balances after the capital return. Key downside risks include a slower-than-expected volume recovery, persistently high trade spending, and lower yields on the investment portfolio. Our estimates are under review.
