Nigerian Breweries rebounds to N44.6bn profit in Q1’25

Onome Amuge

Nigerian Breweries Plc has recorded a turnaround in its financial performance, posting an after-tax profit of N44.6 billion for the first quarter ended March 2025. This marks the company’s first quarterly profit in nearly three years, breaking a two-year streak of losses that had eroded its capital base.

The interim financial report reveals a reduction in the company’s retained deficit and a strengthening of its equity resources, following a capital injection through a rights issue in 2024. The primary driver of this resurgence is the near elimination of foreign exchange (FX) losses, which had plagued the brewer’s financials in recent years. 

Net FX losses plunged from nearly N73 billion in the first quarter of 2024 to N178 million in the corresponding period this year. Over the three years leading up to 2024, Nigerian Breweries had accumulated N337 billion in net foreign exchange losses.

The pressure from finance expenses, stemming from the company’s balance sheet borrowings, also eased considerably during the quarter, further contributing to the improved bottom line. Reversing the sharp increase in finance costs witnessed in 2024, these expenses declined by 15.3 per cent to N15.4 billion in the first quarter. Consequently, net finance expenses fell sharply from N90.8 billion in the first quarter of last year to N15.3 billion in the three months to March 2025. This represents a shift from the 173.5 per cent rise in net finance costs to N252.8 billion recorded at the end of 2024, indicating the success of the company’s strategy to reduce FX loss-generating foreign debts and high-interest local borrowings.

Despite this progress in managing finance costs, the company’s balance sheet borrowings actually increased from N209 billion at the end of last year to N235 billion by the close of the first quarter.

On a positive note, Nigerian Breweries continued to experience strong sales momentum, with net revenue climbing 69 per cent to N383.6 billion in the first quarter, representing an increase of N156.5 billion compared to the same period last year.

Furthermore, the company benefited from a favourable combination of rising sales and relatively contained production costs. For the first time in several quarters, the cost of sales increased at a slower pace than revenue, rising by 49.5 per cent to N217 billion. This cost management led to a 103.4 per cent surge in gross profit to N166.6 billion, outpacing the increase in sales. This contrasts sharply with the previous year, where production costs grew faster than turnover, squeezing gross margins.

Operating expenses also saw moderate increases, with selling and distribution expenses rising by 47 per cent to N66.3 billion and administrative costs growing by less than 40 per cent to N15 billion. These cost efficiencies contributed to a more than threefold jump in operating profit to N85.3 billion, exceeding the operating profit of less than N70 billion for the entire 2024 financial year.

The sharp decline in net finance expenses further bolstered profitability, transforming a pre-tax loss of over N52 billion in the first quarter of 2024 into a pre-tax profit of roughly N70 billion for the first quarter of 2025.

After accounting for an income tax expense of N24.7 billion (compared to a tax credit of N13.5 billion in the same period last year), the company’s bottom line rebounded from a loss of N52 billion to a net profit of N44.6 billion for the quarter. Consequently, earnings per share swung from a loss of N5.07 to a profit of N1.43.