Nigerian Breweries lure investors with dividend increase
by BALA AUGIE
February 20, 2018 | 12:55 am| | | Start Conversation
Nigerian Breweries Plc has allured investors and shareholders with an increase in dividend payment amid a tough and unpredictable macroeconomic environment.
The board of directors of the Nigerian brewer has recommended a N33 billion dividend to shareholders for 2017 financial year, with 15.39 percent increase from the N28.13 billion distributed in 2016.
The recommendation, which amounts to a total dividend of N4.13 per share for the 2017 operating year was part of the company’s filing to the NSE on Thursday, 15 February.
NB has maintained a 100 payout ratio as it distributed all of earnings as dividend, which is a manifestation of a consistent profit position while dividend yield stood at 3 percent.
While the company recorded a 16.18 percent increase in net income to end 2017 financial year, profit margins have succumbed to higher production and material costs. Sales volumes have dropped 4-6 percent, according to parent company Heineken.
NB is trading at a price earnings ratio of 32x; this suggest the market expects the stock to grow its earnings every year.
The stock is also trading at a price to book ratio of 5.8x, meaning that its market value is nearly 6 times its Net Assets.
The Nigerian Brewers’ share price closed at N131.4 at the close of business on Friday losing 40 kobo. It is up 19 percent in the last one year.
The board of the Nigerian brewer has maintained that whilst there are some early signs of improvement in the macro-economic condition, this is yet to be reflected in consumer confidence.
While inflation has fallen a 12 straight months to 15.10 percent for the month of January, it is below the 6-9 percent central bank’s target range.
The hike in transport fare as a result of a fuel scarcity has further eroded the purchasing power of consumers.
Nigerians unemployment rate increased to 18.80 percent in the third quarter of 2017, from 14.20 percent and 14.42 percent in the fourth quarter of 2016, according to a recent report by the National Bureau of Statistics (NBS).
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