International Breweries’ Finance Costs, Tax Expenses Push Loss To N28.6bn In Q3 

International Breweries incurred a further loss of nearly N5 billion in the third quarter, which pushed up the nine-month closing net loss to N28.6 billion.

The finance costs of N6.8 billion on the company’s N320 billion debts, and the 288 percent surge that increased tax expenses to N2.9 billion created a loss in the third quarter, added to another foreign exchange loss of N2.9 billion in the quarter weakened operating profit.

The company’s third quarter unaudited financial report at the end of September 2023 shows that the loss incurred in the third quarter is however a sharp drop from a loss of N21.3 billion recorded in the second quarter that created a net loss of N23.6 billion at half year.

The loss reduction was caused by a drop in foreign exchange loss from about N42 billion in the second quarter to N2.9 billion in the third.

Some progress in improving sales and getting costs under check made in the second quarter was sustained in the third quarter, which saw a turnaround from an operating loss of N3.9 billion in the same quarter last year to an operating profit of N2.3 billion for the third quarter.

Sales revenue growth continued to strengthen from a drop of 5.4 percent in the first quarter to an increase of 15 percent in the second quarter and sped up to a 38 percent rise to N67.6 billion in the third quarter – the biggest quarterly sales delivery of the year so far.

The company’s management continued to support improving sales through cost controls. Production costs grew slightly below sales revenue in the third quarter at 37 percent to N53 billion.

The moderate cost saving continued changing the company’s earnings reading from a 43 percent drop in gross profit in the first quarter to an increase of 13.6 percent in the second quarter and gaining speed to a 41.4 percent rise to N14.6 billion in the third quarter.

All the other operating costs went down in the third quarter, including other expenses that were driven by the exchange loss – which resulted in the improvement in operating profit for the quarter.

Pressures however mounted from finance costs that multiplied more than five times in the third quarter and the tax expense that rose from a tax credit of N1.5 billion over the period.

The company’s nine-month earnings position shows a turnover of N183.8 billion, which is an increase of N23.4 billion or 14.6 per cent over the closing figure of N160.4 billion in the same period last year.

Production cost grew at a higher pace than sales at 17.8 percent to N145 billion over the period but represents a considerable slowdown from about three times the increase ahead of sales recorded at the half year.

The improved cost-income balance raised gross profit by 3.7 percent to N38.7 billion at the end of the third quarter – an upturn from a drop of 26.4 percent in gross profit at the half year.

With cost controls, administrative and marketing expenses grew by 9.6 percent to N34.7 billion but some strength came from a three times jump in finance income to N8.9 billion.

The big challenge for the company came from the foreign exchange loss mostly incurred in the second quarter, which created other expenses of over N36 billion at the end of the third quarter, close to 10 times the corresponding figure in 2022.

The result is an operating loss of N32.4 billion at the end of the third quarter operations, a plunge from an operating profit of N1.5 billion in the same period last year but a slight reduction from an operating loss of N34.7 billion at half year.

A high jump of 181.7 percent in finance cost to over N20 billion added to the pressure during the period with net finance cost advancing by 157.8 percent to over N11 billion at the end of September 2023.

International Breweries has reduced its borrowings from N361 billion at the half-year to N320 billion at the end of the third quarter excluding lease liabilities of about N12 billion. The figure remains N126 billion above the closing balance sheet debts of N194 billion in 2022.

The company closed the third quarter operations with a pre-tax loss of N43.5 billion, swelling from a N2.8 billion loss in the same period last year.

A tax credit of almost N15 billion erased a good part of the loss, leaving a net loss of N28.6 billion for shareholders at the end of the third quarter.

The company closed the half-year operations with a loss of N1.06 per share against a loss per share of 10 kobo in the same period in 2022.

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