Price increases lift topline

In Q1’24, Nigerian Breweries’ reported revenue growth of 84% y/y to ₦227.1 billion. This growth was primarily fueled by price increases, compounded by a low base effect resulting from the cash crunch experienced in the first quarter of 2023. Meanwhile, cost of sales grew by 83% y/y to ₦145.2 billion. This slower-than-revenue growth led to an increase in gross margin (+0.4ppts y/y). In light of this, gross profit rose to ₦81.9 billion (+87% y/y). "

 

Operational efficiency yields gains 

On the operating front, NB recorded a turnaround operational performance. Of note, the company’s OPEX margin fell by 9ppts to 25%. On this basis, OPEX recorded a relatively slower growth to print at ₦57.2 billion (+35% y/y). This, in addition to its improved gross margin, drove a 13.4x jump in operating profit to ₦25.3 billion for the quarter. We commend the performance, as this is coming against the sustained macro headwinds."

 

Outlook

For FY’24, we anticipate sustained revenue growth, to be driven by higher prices. We also expect operational efficiency to keep operating profit buoyant. However, given the Naira volatility we have seen in the year, and the possibility of another depreciation, we expect finance costs to remain elevated. On this basis, we project another loss for the year. For specifics, we see revenue printing at ₦869.4 billion (+45% y/y); and gross profit coming in at ₦334.8 billion (+57% y/y). Also, operating profit is expected to expand to ₦102.2 billion (+132.5% y/y). However, we expect FX losses to print at ₦150 billion, and this will take bottom-line to loss of ₦64.2 billion (FY’23: ₦106.3 billion loss)."