October 29, 2026/Cordros Report
Nigerian Breweries Plc (NB) published its Q3-26 unaudited results after the close of business yesterday (28 October), reporting standalone EPS of NGN0.68 (vs loss per share of NGN0.09 in Q3-25), bringing 9M-26 EPS to NGN3.68 (+33.4% y/y). The outturn was driven by a 736bps y/y expansion in gross margin to 41.1% and an 87.7% y/y reduction in finance costs.
NB’s revenue declined by 3.0% y/y in Q3-26 (9M-26: +5.4% y/y), reflecting lower sales volumes during the quarter. We attribute the weakness mainly to mainstream and value brands, which account for the bulk of sales volumes and remain more exposed to constrained consumer spending. Sequentially, revenue declined by 23.5% q/q.
Gross margin expanded by 736bps y/y to 41.2% in Q3-26 (9M-26: +367bps y/y to 43.3%), as cost of sales declined by 13.8% y/y, well ahead of the topline contraction. We attribute the improvement to lower raw materials and consumables costs (-20.2% y/y | 43.6% of total costs), reflecting the company’s local sourcing initiatives amid softer input prices.
Consequently, EBIT and EBITDA margins expanded by 144bps y/y and 256bps y/y to 5.1% and 12.1%, respectively (9M-26: +66bps y/y and +126bps y/y to 16.2% and 21.8%, respectively), despite a 16.2% y/y increase in operating expenses (9M-26: +18.7% y/y). OPEX growth was driven by higher selling & distribution expenses (+28.7% y/y), reflecting a 37.8% y/y surge in distribution costs (9M-26: +29.4% y/y) and a 12.1% y/y increase in advertising and sales spend (9M-26: +17.9% y/y) during the quarter, as the company defended market share, while administrative expenses declined by 9.5% y/y.
Below the operating line, NB recorded a net finance income of NGN148.13 million in Q3-26 (vs net finance costs of NGN14.00 billion in Q3-25). This was driven by an 87.7% y/y decline in finance costs to NGN1.03 billion on the back of the company’s full repayment of borrowings, the absence of the prior year impairment losses of NGN6.08 billion, and a 151.8% y/y increase in finance income to NGN1.18 billion. In 9M-26, net finance costs declined by 77.7% y/y to NGN7.50 billion (9M-25: NGN33.66 billion), primarily reflecting a 61.3% y/y reduction in finance costs to NGN11.20 billion.
Ultimately, NB recorded a profit before tax of NGN15.36 billion in Q3-26 (vs pre-tax loss of NGN2.77 billion in Q3-25), while profit after tax settled at NGN21.14 billion (vs loss after tax of NGN2.91 billion in Q3-25). For 9M-26, PBT and PAT grew by 32.6% y/y and 33.4% y/y to NGN171.68 billion and NGN114.10 billion, respectively.
Comment: NB’s Q3-26 performance reflects improved earnings, supported by cost deflation, the completion of its deleveraging, and the absence of the prior year impairment losses. However, revenue contracted for the first time this year, with the topline decline reflecting weaker-than-expected volumes in the mainstream and value segments, which tempers our view on the pace of volume recovery. Separately, the effective tax rate normalised over the period, in line with our expectation following the exhaustion of the deferred tax assets at H1-26. Looking ahead, we expect earnings to strengthen in Q4-26, supported by the peak selling season, still subdued input costs and a debt free balance sheet. That said, a slower-than-expected volume recovery, elevated energy and distribution costs, sustained trade spending to defend market share and a higher cash tax burden remain the key downside risks to our outlook. Our estimates are under review.
