NBPlc Slips On NGSE, After 2018 Profit Drops By 41% On Heightened Competition, Weak Consumer Spending

The share price of Nigerian Breweries Plc suffered N8.00 or 9.64%, closing at N75 each on Monday, after the directors presented its audited financials for the year ended December 31, 2018 showed that net profit fell by 41.18%, faster than the 4.26% inch in revenue for the period.

Analysts at Cordros Capital and CSL Stockbrokers blamed the revenue decline on the impact of challenging competitive landscape and weakening “discretionary spend,” higher excise duty expense increased by 21.47% from N21.27bn in 2017 to N25.837bn; leaving a net revenue of N324.388bn, compared to the N344.527bn reported in the corresponding period of 2017.

“For context, the launch of International Breweries’ Sagamu plant has increased the supply of value lager beer, which has continued to weigh on NB’s market share, specifically in the mainstream segment. Going into 2019, we expect the competitive environment to remain largely same, amidst weak consumer wallets. NB currently trades at a P/E of 34.2x, a premium to MEA peer average (29.4x),” Cordros noted in its report to clients.

In a series of tweets, analysts at CSL Stockbrokers expressed belief that “NB’s efforts at local sourcing of raw materials is yielding some positive results while it has also been helped by decline in the price of barley and stable wheat price in the international market.”

Cost of sales dropped by 1.77% from N201.034bn to N197.484bn; resulting in gross profit of N126.903bn, down by 11.56% from N143.492bn in the preceding full year.

Other income (mainly the N777.934m derived from sale of scrap) suffered a 60.47% decline from N2.239bn to N885.364m; just as marketing and distribution expenses climbed marginally from N66.863bn to N70.052bn; even as administrative expenses stood at N20.785bn from N21.747bn.
Profit from operating activities for the period therefore fell 35.31% from N57.121bn in 2017 to N36.951bn.

Finance income soared by 110.33% to N361.923bn from N172.074m, being interest income on bank deposits; even as the management successfully constrained finance cost for the period by 25.99% from N10.663bn to N7.891bn. Net finance cost for the period came to N7.529bn from N10.491bn, representing 28.23% drop over the period.
Profit before tax slumped by 26.49% from N46.63bn in 2017 to N29.421bn; while income tax expense reduced to N9.984bn from N13.581bn in the 2017 full year, representing 26.49% drop.

Profit after tax fell from N33.048bn, translating to Earnings Per Share of N4.13; to N19.434bn or N2.43 per share. The board has therefore proposed a dividend of N1.83, down from N3.13 in prior year, in addition to the interim dividend of 60 kobo, bringing total dividend for the period to N2.43 each, representing a payout of N19.401bn.

While closure date of the register of members for the period has been fixed for March 7 to 13, 2019; payment date is May 20, three days after the annual general meeting holding at the Muson Centre, Lagos.

https://investdata.com.ng/2019/02/nbplc-slips-on-ngse-after-2018-profit-drops-by-41-on-heightened-competition-weak-consumer-spending/