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INTERNATIONAL BREWERIES PLC 9M'23 Earnings - Higher prices boost topline performance

Topline records impressive growth
Despite facing a decline in volumes due to sustained retail-reflective price increases, INTBREW reported significant topline gain in Q3’23, driven by these price increases. Revenue reached ₦67.6 billion, up 38% y/y in Q3’23. On the back of this solid topline growth and slower growth in cost of sales (up 37% y/y to ₦53 billion), gross margin rose 1ppt to 22% in Q3’23. This positive gross margin momentum pushed gross profit to ₦14.6 billion, reflecting a robust 41% increase y/y.

Lower Q3 OPEX insufficient to stem bottom-line loss
While some respite in OPEX was recorded in Q3’23, it was insufficient to rescue the 9M’23 operational performance. OPEX for Q3'23 amounted to ₦12.3 billion, indicating a 14% decrease y/y. However, for the 9M period, OPEX rose 10% y/y to ₦34.7 billion. While lower OPEX helped reduce operating loss for Q3’23 to ₦2.3 billion (Q3’22: ₦3.9 billion operating loss), higher cost pressures in Q1 and Q2 pushed 9M’23 EBIT further into negative territory (₦32.4 billion vs 9M’22: ₦1.5 billion). 

Outlook: TP estimated at ₦5.84
Our expectation for revenue for FY’23 is ₦247.4 billion, representing a 13% rise from FY’22, on the back of elevated prices. However, we expect that operational performance will be negatively impacted by significant FX losses. We project a full year FX loss of ₦37.0 billion and subsequently expect an operating loss of ₦35.8 billion (FY’22: ₦21.3 billion operating loss). Finally, due to higher borrowings, we project finance costs to rise to ₦8.6 billion (+56% y/y). Thus, we project a bottom-line loss of ₦28 billion for FY’23 (FY’22: ₦21.6 billion loss).