Nigerian Breweries Cuts Dividend by 54% as Profit Shrinks 54%
By Dipo Olowookere
Shareholders of Nigerian Breweries Plc, one of the main brewery firms in the country, will have to make do with the 69 kobo being proposed by the board of directors as the final dividend per share for the year 2020.
When compared with the final dividend paid for the 2019 financial year, N1.51 per unit, it is 54.3 per cent lower and the reason for this huge cut can be attributed to the harsh economic situation in the country, compounded by COVID-19, which has significantly reduced the purchasing power of Nigerians.
The disposable income of consumers in the country is very lean, making it difficult for players in the beer industry to generate high turnover and profit like they used to in the past.
In a notice on the Nigerian Stock Exchange (NSE) over the weekend, the brewery giant said the final dividend would be paid to shareholders whose names appear in the register of members as at the close of business on March 10, 2021.
However, the payment is still subject to the deduction of the appropriate withholding tax and approval of the shareholders at the Annual General Meeting (AGM) fixed for April 22, 2021.
If approved, payment would be made the next day. It was also stressed that shareholders may decide to “receive new ordinary shares in the company instead of the final dividend in cash.”
Nigerian Breweries stated that “the election is required to be made on or before April 10, 2021. The reference share price for the purpose of determining the number of shares due to qualifying shareholders who elect for the share option will be a 10-day trading average of the company’s share price on the floor of the NSE, starting on March 11, 2021.”
In the 2020 fiscal year, Nigerian Breweries had it rough as its profit before tax depreciated by 50.4 per cent to N11.6 billion from N23.4 billion in the corresponding period of 2019, while the profit after tax decreased by 54.0 per cent to N7.4 billion from N16.1 billion a year earlier.
A look at the top line of the results by Business Post showed that there was a slight improvement in the revenue, N337.1 billion versus the previous year’s N323.0 billion, while the gross profit decline to N118.7 billion from N131.3 billion.
Also, the other income dropped to N828.1 million from N1.0 billion, while marketing and distribution expenses reduced to N70.7 billion from N77.7 billion, with the administrative expenses slashed to N19.0 billion from N19.4 billion.
Consequently, the operating profit decreased to N29.8 billion from N35.2 billion as the finance income reduced to N246.3 million from N260.7 million, while the finance costs increased to N18.4 billion from N12.1 billion, leaving the net finance cost at N18.0 billion as against N11.9 billion in the same period of 2019.
