Nigerian Breweries plc has released its unaudited first quarter (Q1) results for the period ended March 2011, showing the company’s turnover grew by 28.2 percent from N40.6 billion to N52 billion while profit before tax and profit after tax grew by 25.8 percent and 22.7 percent to N11.85 billion and N11.9 billion from N9.4 billion and N6.5 billion, respectively.
Also, Quarter-on-Quarter (Q-o-Q) profit before tax and profit after tax declined by 5.7 percent and 13.9 percent, respectively.
Commenting on the company’s results, analysts at Afrinvest noted that this was not unexpected as the previous quarter (last quarter of last year) was a festive season with the usual seasonal effect on earnings. “These results (albeit unaudited), modestly surpassed our expectations only on top line basis as turnover came in 13.8 percent above our un-annualised forecasts.
“However, profit before tax and profit after tax fell by 8.1 percent and 5.4 percent below our estimates of N12.9 billion and N8.4 billion, respectively. Profit before tax and profit after tax margins remained relatively flat at c. 23 percent and 15 percent, respectively,” the Afrivest analysts stated.
Afrinvest’s report further stated that “The growth in turnover does not suggest significant market share gains for Nigerian Breweries as sales growth typically mirrors historic trend. We will however be looking to see revenue expansion in 2011 on the back of recent strategic acquisitions by its parent body,
“Notably, these results suggest that headwinds on key input costs are gradually receding as we observe a c.3 percent dip in barley prices within the first quarter of the year. This can partly be attributed to the stable margins recorded compared to the corresponding period of 2010.”
The report noted that counter closed flat on the release of these results. However, the stock has gained 12.8 percent (vs. 1.3 percent for the NSE ASI). Based on these results and the present close price of N87, NB trades at a trailing price/earning of 20.7times compared to a peer average of 21.1times and P/BV of 14.1times (vs. industry average of 18.07times).
“We are optimistic on the long-term prospects of NB premised on potential market share gains and the growth prospects of the Nigerian beer market. However, we maintain our REDUCE (Reduce -10 percent to -20percent expected absolute price performance) rating on the counter in the short to medium term, pending the receipt of finer details behind these numbers.”
NB’s business product line includes the following: Star, Gulder, Heineken, Maltina, Amstel Malta, Legend Stout, and Fayrouz. Its shares stood at about 7.5 billion out of which 4.1 billion is owned by Heineken N.V Group, representing about 54.1 percent of the shares while the remaining 45.9 percent is held by other Nigerians, foreign individuals and institutions.
The company also has technical alliance with the following companies: Heineken International B.V., Heineken Supply Chain B.V., Heineken Brouwerijen B. V., Amstel Brouwerijen B.V., Premier Beverages International B.V., and Fayrouz Manufacturing and Technology Centre GMBH.
