Nigerian Breweries Plc ended the third quarter operations with a net loss of over N57 billion for the group, swelling from N47.6 billion at half year.
A further loss of N9.6 billion occurred in the third quarter, as foreign exchange losses grew and the company’s huge borrowings pressured earnings with the mounting cost of funds.
The interim financial report of the brewing company for the third quarter ended September 2023 shows that net sales slowed down in the third quarter from an increase of 13 per cent to N154 billion in the second quarter to 4.2 per cent growth to N124.4 billion in the third.
Production cost was flat at N84 billion and the gross profit of N40 billion for the third quarter was insufficient to meet operating cost of close to N42 billion, which left an operating loss of over N1 billion for the quarter.
Gross profit weakened in the third quarter from an increase of 21.6 per cent to over N68 billion for the second quarter to an increase of 12.4 per cent in the third quarter.
Also, the operating loss for the third quarter is a plunge from outstanding growth of 119 per cent in operating profit in the second quarter to N26.5 billion.
Net foreign exchange loss of N1.6 billion and finance expenses of N7.7 billion recorded in the third quarter added to the operating loss to create a pre-tax loss of N10 billion for the quarter. A tax credit of N723 million reduced the net loss figure to N9.6 billion for the third quarter.
The company’s earnings records for the nine months of operations show a turnover of N401.8 billion, which is a modest improvement of 2 per cent from N393.4 billion for the same period last year. The weakness in sales in the current financial year began with a drop in the first quarter.
The brewing company continued facing the challenge of production costs growing ahead of sales revenue to the detriment of margins. At over N249 billion, input costs grew by 4.2 per cent – more than double the 2 per cent improvement in turnover.
The result is a decline in gross profit by about N2 billion to stand at N152.6 billion at the end of the third quarter.
The company kept marketing and distribution expenses flat at N101.6 billion but administrative expenses grew by 21.4 percent to N25 billion over the period to erode margins further.
With the cost increase combined with an operating loss incurred in the third quarter, the nine-month position saw a drop of 23 per cent in operating profit to N27.3 billion – down from N28.4 billion at the half year.
Two major costs that stand in the way of the company’s profitability this year are net foreign exchange losses and finance expenses and both grew further in the third quarter.
Net foreign exchange loss multiplied more than 8 times year-on-year to N86.8 billion at the end of the third quarter and cost of finance jumped more than three times to N18.9 billion over the same period.
Nigerian Breweries carries interest-bearing debts of N308 billion in the balance sheet – more than two and half times the outstanding debts of about N122 billion at the beginning of the year.
The result is a net finance cost of N105.4 billion, climbing from a little above N16 billion in the same period last year.
Net finance cost gulped operating profit and created a pre-tax loss of over N78 billion at the end of the third quarter operations. This compares to a pre-tax profit of N19 billion in the same period in 2022.
An income tax credit of almost N21 billion lowered the company’s after-tax loss to over N57 billion against an after-tax profit of N14.8 billion in the same period last year.
Loss per share amounted to N6.89 for Nigerian Breweries at the end of the third quarter, down from earnings per hr fN18 t aerdls er.
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