High Diesel Price, Others Push Breweries Sector’s Operating Cost By N104bn To N565bn

The high cost of diesel and other operating expenses has pushed up the cost of operations of the brewing industry by N104.1 from N461.3bn as of the end of September last year to N565.4bn by the end of September 2022.

This is just as profits also dropped as a result of the huge operating cost within the period under review.

But the combined revenue of the four listed breweries companies on the Nigerian Exchange Ltd rose 24.99 per cent to N609.36bn compared to the N487.5bn recorded by September last year.

The brewers include: Nigerian Breweries Plc (NB); Guinness Nigeria Plc; International Breweries Plc and Champion Breweries Plc.

Data analyzed from the unaudited financial accounts of Guinness Nigeria Plc; Champion Breweries showed that profit of both companies for the period was a cumulative N2.93bn.

The biggest loser, International Breweries ended the first three quarters of 2022 running at N2.8bn loss, while Nigerian Breweries that is the leading beer maker was the only brewery firm that posted a growth in net profit of N14.75bn.

Three brewers that declared profit (Nigerian Breweries, Guinness and Champion Breweries) during the nine months period of 2022 made a cumulative profit of N17.68bn, up from N12.9bn recorded during the nine months period of last year.

High cost of sale due to the country’s inflation rate drove their operating cost to N388.67bn compared to N332bn for last year.

The companies also paid a combined N176.7bn on administration and marketing expenses. This is a 36.6 per cent increase compared to the N129.3bn spent in the corresponding period of last year.

The cost of borrowing also rose to N22.48bn as against the N13.2bn spent on borrowings in nine months of 2021.

The surge in the cost of borrowing can be linked to the hike in the Central Bank of Nigeria’s monetary policy rates which moved from 11.5 per cent to 13.0 per cent in May. The MPR was also moved from 13.0 per cent to 14.0 per cent and then 15.5 per cent in September 2022.

Consequently, this has pushed the maximum lending rate of banks to 28.06 per cent in September 2022.

Nigerian Breweries Plc

The NB as of the first three quarters of 2022 controlled 64.56 per cent of the market share of breweries sector earning N393bn of the combined N528.4bn recorded by the four listed brewers.

The Company gained an additional revenue of N84.16bn from the N309.28bn recorded last year as it grew 27.2 per cent in September 2022.

Its profit was up 79.6 per cent from the N8.69bn recorded last year to N14.75bn, making it the only listed brewery company to grow profit year on year.

Cost of sales rose 20.2 per cent from N198.7bn to N238.9bn, while its tax liabilities was down by 4.1 per cent from N4.7bn in 2021 to N4.3bn in September 2022.

International Breweries Plc

International Breweries controls 26.3 per cent of the market share with a revenue of N160.4bn which rose from N128.39bn in 2021.

The company posted a loss after tax of N2.8bn.

International Brewery’s cost of sales rose to N133.5bn from N99.6bn, while tax liability fell to N38.8m from N3.3bn as of September 2021,

Guinness Nigeria Plc

Guinness Nigeria is the third largest brewery company by revenue during the period after making N52.84bn in the nine months of 2021, up from N47.46bn recorded in 2021. It controls 8.69 per cent of the market share.

Guinness profit declined by 32 per cent from N4bn in 2021 to N2.74bn.

The company spent N43.6bn on production cost, up from the N32.2bn recorded last year. But it spent N1.29bn on tax payment which is down from the N1.9bn recorded in 2021.

Champions Breweries Plc

Champions breweries was the fourth brewery company posting N2.6bn revenue, which is an increase from the N2.2bn recorded last year. It only controls meagre 0.43 per cent of the market.

During the period, the company’s profit after tax declined from N190.1m in September 2021 to N183.9m in 2022.

It witnessed a surge in the cost of sales from N1.45bn in 2021 to N1.67bn recorded in 2022.

The company also saw a slight rise in tax liabilities of N75m, up from the N73.8m spent last year.