Ilesa, Osun State based International Breweries Plc, on Friday became the first of companies with March 2017 year-end to present an audited report to the Nigerian Stock Exchange. The result indicated that although sales revenue grew by 40.58%, profit after tax was down 61.01%, following a significant rise in financing costs for the year, the bulk of which was “unrealized foreign exchange” related.
Consequently, shareholders meet to consider the account at a date yet to be announced by the board, approval of dividend payment would not be part of the agenda, in what the directors blames on “the company’s gearing ratio” (and) in line with its policy.
“The board views this decision as appropriate in the circumstance and in the future interest of the company,” they added.
Meanwhile, revenue for the period amounted to N32.711bn, up from N23.269bn, wholly derived from the domestic market from “the sale of beer and other alcoholic and non-alcoholic beverages”
Cost of sales jumped to N17.546bn from N12.56bn; with raw materials and allocated overheads of N14.28bn, up from N9.838bn; followed by salaries, wages and allowances of production staff which rose from N834.855m to N1.005bn; technical management fee rose from N465.387m to N654.224m; among others.
This resulted in gross profit of N15.164bn, as against N10.708bn in the corresponding period of 2016; while other income jumped to N102.403m, compared with N44.772m in the comparative period of prior year.
Marketing, promotion and distribution expenses for the year rose to N5.089bn from N3.596bn; boosted by transportation and distribution expenses of N2.882bn from N1.709bn; followed by advertising and promotion cost of N1.526bn, up from N1.344bn; while salaries, wages and allowances of the sales and distribution staff accounted for N681.174m from N542.543m.
Administrative expenses rose slightly from N2.016bn to N2.092bn; leaving operating profit of N8.084bn, an improvement over previous year’s N5.141bn.
Finance Costs rose to N5.195bn from N1.709bn, swelled by the N4.308bn losses suffered as a result of foreign exchange losses on financing, the lion’s share of which was the N3.854bn unrealized net exchange losses, up from just N19.208m in the corresponding period of last year. The realized portion of the exchange losses on financing however stood at N454.599m from N235.459m; just as interest paid on bank borrowings and overdraft dropped to N784.624m from N1.379bn.
These left profit before tax at N2.891bn as against the preceding year’s N3.656bn. The company also paid company income tax of N1.693bn, as against N676.952m in 2016; besides the N164.211m deferred tax provision, down from the previous N327.126m.
Profit after tax therefore fell to N1.034bn, which translates to earnings per share of 31 kobo; as against N2.652bn net profit representing EPS of 81 kobo.
Meanwhile, the board had last week announced plans for a scheme of merger with sister companies- Pabod Breweries, Port Harcourt, formerly owned by the Rivers State Government and Onitsha, Anambra based Intafact Beverages.
All three companies are majority owned by SABMiller, South Africa Breweries Miller, which holds 2.377bn or 72.17% of International Breweries’ 3.294bn, which is still reflected as owned by Brauhaase International Management GmbH as portfolio investor, leaving Stanbic IBTC Nominees Nigeria Limited with 5.17%.
SABMiller, had through a strategic alliance with French Groupe Castle acquired majority stake in International Breweries previously held by Brauhaase International Management GmbH (a wholly owned subsidiary of Warsteiner Group of Germany), which had been the technical partner of International Breweries since inception.
SABMiller itself was acquired last September by Leuven, Belgium based brewer- Anheuser-Busch InBev NV (AB InBev) in a $103bn takeover, after shareholders voted 95.46% in favour of the deal.