Nigerian Breweries (NB) published second quarter 2017 results showed that the brewer grew its sales by 12 per cent to N89.7 billion while profit before tax PBT, and that of after PAT, recorded N16.6 billion and N12.3 billion. This showed a 58 per cent and 43 per cent rise in profitability indices respectively. The strong performance was driven by the aggressive sales growth which the company gross margin expansion to 45.4 per cent and a 35 per cent decline in net finance costs.
These factors more than offset a 7 per cent increase in operating expenses. Further an increase in the effective tax rate to 26 per cent compared with 18 per cent in second quarter of 2016 resulted in PAT growth narrowing to 43 per cent. However, sales were flat when compared to previous quarters but profit before tax PBT, was down 5 per cent. The quarterly decline in PBT was due to a 98 per cent and a 3 per cent rise in net finance costs and operating expenses respectively. These factors offset a gross margin expansion. A lower tax rate in the quarter led to PAT growing by 7 per cent.
Similar to most consumer goods firms, NB’s results were driven more by pricing rather than volume growth. NB implemented a price increases of around 12 per cent in the latter half of 2016, which is almost in line with the 12.4 per cent yearly increase on the top line.
