November 9, 2026/InvestmentOne Report
Net revenue for 9M:2026 rose to NGN1,102.66bn, representing a 5.38% year-on-year increase over NGN1,046.38bn recorded in 9M:2025, but the quarterly path turned negative. Q3:2026 revenue fell 3.00% YoY to NGN298.98bn and 23.47% QoQ, after growth of 7.66% in Q1:2026 and 10.20% in Q2:2026. Q3 is seasonally soft, with the festive fourth quarter carrying the peak. We attribute the weakness to continued consumer trade-down and reported discounting in bars and lounges after the World Cup.
Meanwhile, cost of sales fell 1.03% YoY to NGN624.76bn from NGN631.23bn (Q3:2026: -13.79%), driven by a 4.46% fall in raw materials and consumables to NGN465.17bn (Note 6), the stability of the naira at NGN1,321 to NGN1,330 per dollar and the NGN76bn productivity programme. Consequently, gross margin improved to 43.34% from 39.67%, while gross profit expanded by 15.11% YoY to NGN477.90bn.
Gross Margin Gains Largely Absorbed by Selling Costs: Other income fell 17.40% to NGN2.89bn, a small contributor. Selling and distribution expenses, the largest expense line after cost of sales, grew 24.29% to NGN240.94bn, about 4.5 times the rate of revenue growth. distribution rising 29.41% to NGN100.61bn and advertising and sales rising 17.92% to NGN105.80bn, with management citing Middle East-related energy and transport inflation. Administrative expenses grew 0.46% to NGN59.85bn, employee benefits rose 15.14% to NGN73.68bn, and the net expected-credit-loss charge fell 60.81% to NGN0.82bn, which sits uneasily with an 83.13% rise in receivables. Results from operating activities grew 9.84% to NGN179.18bn, lifting operating margin to 16.25% from 15.59%, although Q3:2026 operating margin was only 5.09% against 19.61% in Q2:2026 (Q3:2025:3.64%) because opex grew faster than revenue.
Lower Finance Costs Continue to Drive Earnings Growth: Finance income rose 179.57% to NGN3.70bn on a larger cash balance, finance costs fell 61.25% to NGN11.20bn and net finance costs fell 77.72% to NGN7.50bn from NGN33.66bn, leading to an increase in profit before tax of NGN171.68bn (+32.60%). We saw an Interest expense of NGN3.20bn against NGN37.40bn after NB repaid its remaining NGN59.71bn of loans, while other net finance expense swung to a NGN6.40bn loss from a NGN6.30bn gain, almost all of it the NGN6.11bn foreign exchange loss on cash balances as the naira firmed.
Profit Growth Is Real, but Tax Timing Flatters the Quarter: Income tax expense rose 30.97% to NGN57.58bn, slightly behind the +32.60% growth in pre-tax profit, as the nine-month effective tax rate eased to 33.54% from 33.96%. As a result, profit after tax grew 33.44% to NGN114.10bn, net margin expanded to 10.35% from 8.17%, and basic earnings per share rose 33.82% to NGN3.68 from NGN2.75.
OUTLOOK: Going forward, Q4:2026 is the test of the revenue trend. Furthermore, we expect the organization to continue to grow as it integrates the process and products from the recent purchase of Distell. We hence place a STRONG BUY rating on NB as we are optimistic about the development of the organization and its intent to reduce debt burdens in the long term and full production across all plants.
Catalysts supporting our thesis include: (1) Q4 festive trading, where Oktoberfest, the Maltina relaunch and NB@80 meet disinflation (14.63% in September) and the lower policy rate; (2) potential dividend resumption with the FY2026 results in February 2027, as retained earnings are now positive at NGN34.79bn; (3) a possible second price round ahead of the 2027 excise step to NGN76 per litre; (4) continued naira stability sustaining the input-cost gains; and (5) settlement of, or clarity on, the NGN90.56bn of technical fees due to the group.
Risks that would change our view include a Q4:2026 revenue print below NGN557.56bn, which would confirm share loss, selling and distribution costs staying above 27.00% of revenue. We derived Q4:2025 base of NGN420.62bn, an operating margin of 12.50% and an effective tax rate of 34.00%, which gives FY2026E profit after tax of NGN148.89bn and EPS of NGN4.81.
Please click here to download the full report.