Since 2023, the business environment has been turbulent, marked by macroeconomic challenges. 

    Consequently, many companies have experienced a decline in profitability and significant losses. The consumer goods sector, particularly the Brewer/Distiller sub-sector, appears among the hardest hits, with some reporting increased retained losses and erosion of shareholders’ funds. 

    An analysis of the three major companies’ results shows varying degrees of impact caused by these economic challenges. 



    Revenue Analysis:

    In 2023, the three companies reported a combined revenue of N1.090 trillion, reflecting a 12% YoY growth. 

    The growth trajectory continued to improve in the first quarter of 2024, with combined revenues surging by 76% to N408.043 billion. This figure represents 37% of the total aggregate revenue recorded in 2023.  

    The growth in Q1 2024 suggests that the companies are on track to surpass the revenue achieved in 2023.  

    Though Nigerian Breweries led in revenue generation for 2023, reporting N599.509 billion out of the total N1.090 trillion, it represents a modest 9% YoY growth despite the positive price mix according to the company.  

    This suggests that while the price increases helped boost revenue, they might have also dampened overall sales volume as consumers could be purchasing less due to higher prices, limiting overall growth. 

    Notwithstanding, it maintained its market leadership in the first quarter of 2024 with a revenue of N227.120 billion, accounting for 37% of the three companies’ combined revenue of N408.043 billion. 

    International Breweries led in terms of revenue growth and ranked second in terms of value. Its revenue grew by 19.18% YoY in 2023, reaching N260.598 billion. 

    It further sustained this position with an impressive 89.74% YoY growth in the first quarter 2024. 

    Guinness Nigeria Plc ranked second in terms of revenue growth with a 10.94% year-on-year increase to N229.441 billion but placed third in terms of overall value. 

    It’s noteworthy to recognize that despite the apparent healthy growth in revenues of these companies in 2023, it falls short of their 5-year compound annual growth rate. This implies a potential slowdown in revenue growth compared to historical trends and could point to, among other factors, changes in consumer behaviour.



    Effects of FX Losses and Interest Expenses:

    Despite experiencing revenue growth and healthy gross profit, the companies reported substantial pre-tax losses, mainly attributed to net foreign exchange losses and elevated interest expenses. 

    In 2023, the three companies collectively reported a pre-tax loss of N264.630 billion, which escalated in the first quarter of 2024 to a combined pre-tax loss of N210.957 billion. This amount represents nearly 80% of the full-year 2023 figure, indicating a heightened impact. 

    The escalating losses observed in Q1 2024 signal a troubling pattern, raising concerns that the pre-tax losses for the entire year of 2024 could exceed those of 2023, exacerbating the companies’ already precarious balance sheet position. 

    The increased losses in Q1 2024 suggest a worrisome trend, indicating that the pre-tax losses for the full year of 2024 may surpass those recorded in 2023 and that may worsen the companies’ precarious balance sheet position. 

    This highlights the immediate need for strategic interventions and decisive measures to reverse this trajectory and stem further deterioration of the balance sheet. 

    The combined net retained losses surged by 299% to N146.717 billion in 2023 and continued to grow, reaching N213.814 billion in the first quarter of 2024.   

    This significant increase contributed to the reduction of their combined shareholders’ funds to just N12.043 billion as of March 31, 2024. 

    Nigerian Breweries experienced a significant shift from a pre-tax profit of N17.341 billion in 2022 to record the highest pre-tax loss of N145.224 billion in 2023.  

    This trend continued into Q1 2024, where it ranked second with a pre-tax loss of N65.580 billion. 

    These losses can be attributed primarily to substantial foreign exchange losses and high-interest expenses.  

    In 2023, Nigerian Breweries reported the highest foreign exchange loss among the three companies, amounting to N153.333 billion, which accounted for 60% of the combined foreign exchange losses of N255.267 billion.  

    Additionally, it had the highest interest expenses of N35.065 billion due to its elevated leverage.  

    In Q1 2024, it recorded a foreign exchange loss of N72.486 billion and interest expenses of N18.000 billion. 

    These factors contributed to the pre-tax loss and further increased its retained losses to N78.357 billion, consequently reducing its shareholders’ funds to just N11.414 billion as of Q1 2024. 

    International Breweries secured the second spot, reporting a pre-tax loss of N97.267 billion, representing a significant 262.34% YoY growth. 

    Unlike Nigerian Breweries, International Breweries have consistently reported pre-tax losses over the past five years.  

    In Q1 2024, the loss soared to N89.354 billion, signalling a staggering 2,069% year-on-year growth; about 92% of the full-year 2023 figure. 

    International Breweries grapples with a debt burden and foreign exchange losses. It posted the second-highest foreign exchange loss in 2023 at N55.981 billion, escalating to the highest in Q1 2024 at N92.436 billion 

    These factors not only contributed to pre-tax losses but also increased its retained losses to N188.723 billion as of Q1 2024, surpassing those of the other two companies and consequently reducing shareholders’ funds to merely N5.354 billion.  

    Given the performance in Q1 2024, it is highly probable that shareholders’ funds would be eroded by 2024. 

    Guinness Nigeria Plc appears to have a relatively diminished impact, evident in its smaller pre-tax losses both in the 2023 fiscal year and the first quarter of 2024.   

    The company reported the lowest pre-tax loss of N11.139 billion in 2023 and N56.023 billion for the first quarter of 2024.

    This trend contributed to the decrease in retained earnings in 2023 and a retained loss of N53.266 billion in the first quarter of 2024.  

    This resulted in negative shareholders’ funds of N4.724 billion as of March 31, 2024, making it the only company among the three with negative shareholders’ funds. 

    This suggests that Guinness Nigeria Plc has been comparatively better than Nigerian Breweries and International Breweries. 

    Despite this, the company still experienced declining retained earnings, leading to a negative shareholders’ funds position by the first quarter 2024.  

    These trends suggest that alongside external economic challenges, the companies are contending with operational inefficiencies as well.  

    In 2023, the companies demonstrated an average low asset turnover of 0.69. A low asset turnover ratio suggests that the companies are not maximizing the use of their assets to generate revenue. 

    Furthermore, the significant debt burdens of the companies, amounting to N982.875 billion as of the first quarter of 2024, with International Breweries and Nigerian Breweries responsible for N473.883 billion and N469.635 billion respectively, have led to considerable financial leverage. 

    Considering the anticipated rise in pre-tax loss, the increase in retained loss, and the continued erosion of shareholders’ funds, it’s crucial for the companies to re-evaluate their strategies. 

    Efficiently leveraging assets to generate revenue and reassessing the capital structure through equity capital infusion could be especially crucial now.



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