The brewer announced a 31.4% YoY plunge in earnings to N5.5 billion in its Q1’20 unaudited results. The numbers suggest weaker cost efficiency and pressured operating cash flow.

The company in Q1 2020 recorded a decrease of 27.8% and 31.4% in Profit Before Tax (PBT) and Profit After Tax (PAT) respectively, with PBT declining from ₦11.46 billion to ₦8.28 billion and PAT declining from ₦8.03 billion to ₦5.05 billion.

NBPlc reported a 22.4% YoY plunge in core operating earnings to N10.9 billion in Q1’20, following significant increases in marketing & distribution expense (+13.5% YoY) and administrative spend (+16.1% YoY). We believe the high marketing expense reflects increasing promotional intensity in the breweries market.

The effective tax rate was also 3.5ppts higher YoY in the quarter.

A closer look at the result by Brand Spur revealed that the cash generated from operations plunged by 61.9% YoY to N4.4 billion in Q1’20, largely reflecting weak working capital management.

Notably, the company experienced significant expansions in changes in trade & other receivables and prepayment in the review period Pressure on net operating cash flow was further compounded by a 24.0% YoY increase in Value Added Tax (VAT) in the quarter.

NBPlc was able to keep revenue and cost of goods sold largely steady despite COVID-19 induced crisis in the latter part of the quarter. Specifically, Gross profit margin only contracted by 19bps YoY in Q1’20.

Despite the over four-fold YoY jump in non-current borrowing, finance cost remained largely subdued (+1.5% YoY) in the review period. The overall moderation in yield environment and a cutback in short term borrowings may have reduced finance cost pressures for the business.

Consequent to the above, Investors earning’s an indicator (Earnings per Share) decreased to 69 kobo from N1 in Q1 2019.

SOURCE:https://brandspurng.com/2020/04/22/nigerian-breweries-reports-reduced-profits-for-first-three-months-of-2020/

hmmm

Reduced numbers of beer drinkers...

They are still recording reduced profits.

Nigerians will always consume beer.