International Breweries Posts N13.4bn Loss amid Rise in Marketing Costs

By Dipo Olowookere

The woes of International Breweries stretched into the fourth quarter of 2019 as both the top-line and bottom-line of the company’s Q4 results released on Friday were covered in blood.

The brewery company, which operates in a very harsh environment alongside its competitors as a result of tax on alcohol, saw its revenue for the period ended December 31, 2019 going down to N35.1 billion from N37.3 billion in the same quarter of 2018, with the cost of sales rising to N23.2 billion from N21.9 billion, mainly because of an increase in the materials consumed and allocated overheads.

It was also observed that administrative expenses significantly increased in the period under review to N8.3 billion from N3.7 billion, largely due to rise in the business running costs to N3.9 billion from N951.7 million, and depreciation, which inflated to N3.0 billion from N214.8 million, despite reduction in the salaries and allowances of administrative employees to N880.1 million from N2.0 billion.

Business Post further observed that marketing and promotion costs grew to N6.0 billion from N4.2 billion and a breakdown showed that, while the cost for transportation and distribution remained flat N3.0 billion over the two comparative periods, advertising and promotion broadly rose to N6.0 billion from N4.2 billion, while employee benefit expense deflated to N26.6 million from N38.8 million.

According the financial statements, other income, mainly from the sale of scrap, went down to N3.7 million from N17.8 million, while the gross profit reduced to N11.9 billion from N15.4 billion.

International Breweries recorded nothing for its finance income in Q4 2019 against N78.7 million in the corresponding quarter of 2018, while the finance cost increased to N9.2 billion from N7.0 billion, with the net finance costs at N9.2 billion in Q4’19 versus N6.9 billion in Q4’18.

The brewery, which has one of its flagship products, Trophy, leading the retail market in Nigeria in terms of sales, according to a research done by Business Post recently, declared a loss before tax of N13.4 billion in the last quarter of 2019 in contrast to a profit before tax of N1.1 billion in the same period of 2018.

Similarly, the company announced a loss after tax N9.1 billion compared with the profit after tax of N3.3 billion in the corresponding quarter of 2018.

This came despite the N5.6 billion income tax credit received by the firm in the last three months of last year in contrast to the N2.2 billion tax credit it got in the same time of two years ago.