Nigerian Breweries Confident to Rebuild Lost Retained Profit

Nigerian Breweries Plc is quite confident of building profit in the second quarter, more than sufficient to clean out accumulated losses and begin rebuilding retained earnings melted by three years of running losses.   

Since last year, the brewing company’s N99 billion profit in 2025 and N56 billion in Q1 2026 have been used to offset N170 billion in accumulated losses.

There is still over N22 billion needed to level up, and the company’s management expects to cover it with the second-quarter profit and return to a positive earnings position by the half-year, bringing the turnaround journey to a destination.  

The positive development will rekindle hopes for shareholders, who have tasted no dividends from their company for the past three years. 

With growing profit powered by cost savings, prospects are good for Nigerian Breweries to accelerate retained earnings’ recovery in the second half to the point of beating the previous high of N90 billion in 2022.

The company’s interim financial report for the first quarter ended March 2026 reflects the positive effects of the balance sheet deleveraging it carried out last year. Interest expenses on borrowings fell from N15 billion in the same quarter last year to N8 billion, sustaining the fall from N98 billion in 2024 to below N45 billion in 2025.

This is in line with management’s expectation that finance expenses will be downward heading following the engagement of its new corporate financial strategy.

Also, net foreign exchange losses are out of the way, having closed foreign currency exposure windows through the payoff of foreign currency-denominated borrowings.

Interest-bearing debts are further down from about N60 billion at the end of 2025 to N56 billion at the end of the first quarter after a big slash from N209 billion at the end of 2024.

Sales revenue is expected to pick up in the second quarter from a 7 per cent year-on-year increase to N413 billion in the first quarter. Production cost didn’t lend itself to cost saving in the first quarter and grew at par with sales to N233 billion – a situation which is expected to sustain at the half-year. 

Where to watch are the operating costs, mainly selling and distribution expenses, which claimed a good part of gross profit in the first quarter. High and rising selling and distribution expenses remain the headache of the company’s management, which devoted nearly one-half of gross profit to selling and distribution costs in 2025.

At the end of the first quarter, gross profit grew by N13.4 billion or 8 per cent year-on-year to N180 billion, and selling and distribution costs grew at a faster pace of 11 per cent to claim more than half the increase in gross profit.

Further encroachment of selling and distribution expenses on profit can be expected in the second quarter, driven by increased energy costs. With other operating cost increases, operating results ended in a marginal improvement of 2.5 per cent to N87.4 billion for the first quarter.

Financing activities, however, changed the momentum with a major expansion of finance income and a big cut in finance expenses. Finance income jumped five times to N1.3 billion over the review period, while finance cost fell by 46 per cent to slightly above N8 billion. 

Net finance cost, therefore, dropped from over N15 billion in the first quarter of last year to under N7 billion by the close of the first quarter in March 2026. 

The cost saving from finance expenses is the game changer, from a marginal increase in operating profit to an increase of 15 per cent in pre-tax profit, amounting to N80.4 billion for the first quarter.

With income tax moderation, profit for the period grew much stronger at 25.6 per cent to stand at almost N56 billion at the end of the first quarter. 

On the receiving end of the company’s aggressive financing strategy are trade creditors – the interest-free credit providers whose stake has grown from N390 billion at the end of 2025 to the region of N400 billion on company payables at the close of the first quarter. 

Nigerian Breweries closed the first-quarter operations with earnings per share of N1.80, which is an improvement from N1.43 per share in the same period last year.