Nigerian Breweries Q1’21 Profit Jumps 40% Despite Rise in Borrowing Costs

By Dipo Olowookere

The year 2021 is looking good for a popular beer maker in the country, Nigerian Breweries Plc, as the company recorded an improvement in its profit.

In the first three months of the year, the brewer recorded a 38.6 per cent growth in profit before tax to N11.5 billion from N8.3 billion achieved in the first quarter of 2020.

Despite a higher tax paid in the year, the company declared a net profit of 40.0 per cent as it closed with N7.7 billion in contrast to N5.5 billion declared in the same period of last year.

Nigerian Breweries has had to battle with higher tax in the past years because the federal government increased the excise duty on alcohol, which impacted negatively on the financial performance of players in the industry as they could not pass on the increment to consumers.

But it seems Nigerian Breweries is gradually finding its way out of the challenges as the leading beer maker in the country reported an improvement in revenue for the period.

According to the financial statements of the firm released on Friday, the revenue increased to N105.7 billion from N83.2 billion, while the cost of sale rose to N66.0 billion from N48.3 billion, leaving the organisation with a gross profit of N39.7 billion compared with N48.3 billion recorded in the corresponding period of 2020.

Also, the other income increased to N368.0 million from N181.4 million, while marketing and distribution costs gulped N19.8 billion versus N18.8 billion a year ago, while the administration expenses jumped to N5.8 billion from N5.3 billion.

In addition, the finance income increased during the first three months of the year to N25.4 million from N7.9 million, while the finance costs, which is also the borrowing costs, moved up by N3.0 billion from N2.7 billion and this left the net finance expenses bleeding by N3.0 billion compared with negative net finance costs of N2.6 billion in Q1 of 2020.

Business Post reports that Nigerian Breweries is optimistic that this fiscal year would be positive despite the coronavirus pandemic still having an on the economy. The firm said its focus remains mitigating the impact of the pandemic on its business operation.

The management further revealed that the priority is “protecting the health, safety and welfare of employees, customers and partners,” adding that efforts are being made to regularly monitor and evaluate the company’s financial position and performance in the light of the pandemic.