The Nation Newspaper

Tag: Nigerian Breweries

  • Nigerian Breweries steps up earnings growth

    Nigerian Breweries steps up earnings growth

    Nigerian Breweries’ second quarter earnings figures show an accelerated growth from the records posted at the end of first quarter but a slowdown in revenue looks quite likely at full year. Revenue and profit numbers are just moderately ahead of the corresponding second quarter figures in the preceding year but the brewing company has improved the growth rates in the current year.

    Based on the second quarter growth rates, the company’s full year earnings outlook has improved. The improved revenue growth rate however is still indicating that sales revenue could slow down for the second year.

    Sales revenue grew by 7.4% to N133.82 billion in the second quarter compared with the corresponding figure in 2012. It is however an acceleration growth from the N64.57 billion the company reported in the first quarter. Based on the current growth rate, we revise our initial full year sales revenue projection from N260 billion to N269.5 billion for Nigerian Breweries in 2013.

    If the projected full year turnover figure is realised, that will represent an increase of just 6.7% over the full year sales revenue figure of N252.67 billion of the company in 2012. Despite an accelerated growth in the second quarter, the full year outlook still indicates a slowdown in sales revenue. The company had grown turnover by 11.7% in 2012, which itself was a slowdown from a rise of 21.8% in 2011. A further step up in revenue growth may still happen in the second half of the year.

    Profit growth also accelerated in the second quarter compared with the first quarter growth rate. At N20.66 billion, the company’s after tax profit is only 6.6% up from the corresponding quarter last year but it is more than double the N9.42 billion net profit posted in the first quarter.

    Based on the improved growth rate in the second quarter, we mark up our initial full year net profit projection from N38.8 billion to N42.1 billion for Nigerian Breweries in 2013. This will be an increase of 8.5% from the company’s full year net profit figure of N38.06 billion in 2012. It will also be a better performance than last year when after tax profit slipped from the 2011 peak of N38.46 billion.

    While net profit margin inched down from 15.5% in June 2012 to 15.4% this year, it is an improvement from 14.8% recorded in the first quarter. Net profit margin is expected to improve slightly further to 15.6% at full year against 15.1% recorded in the 2012 full year.

    Based on the forecast net profit for the year, the company is expected to earn N5.46 per share at the end of the current year. Earnings per share amounted to N2.73 at the end of the second quarter compared with N2.56 in the corresponding period last year. The company earned N4.94 per share in the 2012 full year.

    Dividend per share was unchanged at N3.0 in the preceding two years after improving from N1.25 paid for the 2010 operations. With a new peak in earnings per share expected in 2013, it is reasonable to expect an improvement in dividend per share from the current year’s operation. Based on the pay-out ratio of over 60% in 2012, a minimum dividend per share of N3.30 is expected from Nigerian Breweries at the end of the current year.

    Despite strict cost management, the company is unable to get profit to grow ahead of sales revenue. Cost of sales was effectively managed to grow slightly lower than turnover at 7.2% to N67.44 billion in the second quarter, which improved gross profit slightly ahead of sales revenue at 7.6% to N66.37 billion.

    A strong growth of 61.8% in other income reinforced gross profit but two major expense items prevented the earnings from flowing down to operating profit. These are marketing and distribution expenses, which grew by 8.2% to N21.04 billion and administrative cost, which rose by 26.8% to N13.72 billion. Operating profit therefore improved only slightly by 2.3% to N33.05 billion against the 7.4% growth in sales revenue.

    Net interest expenses declined by 9.1% to N3.44 billion during the review period and this helped pre-tax profit to improve by 3.8% to N29.61 billion. Interest expenses may decline at full year based on the current growth rate. The company had paid N8.31 billion interest charges in the 2012 full year. A decline of 2.2% in taxation further improved net profit growth at 6.6% in the second quarter.

    The decline in interest expenses seems to reflect a decline in long-term loans outstanding between the end of December 2012 and June 30 2013. At the end of the second quarter, the company’s long-term loan, which stood at N45 billion in December went down to N39 billion. This accounted for a decline of 7.9% in the company’s non-current liabilities over the period.

    Other major developments in the company’s balance sheet over the past six months to June 2013 include a drop of 16.5% in inventories, which was led by a drop of 26.9% in finished goods. There was an increase of 25.3% in trade and other receivables to N24.97 billion and a 109.4% jump in prepayments at N1.89 billion. Cash and bank balances went down by 12.9% to N8.29 billion during the period.

    Against a marginal decline of 1.7% in total current assets to N55.93 billion, current liabilities went up by 10.8% to N95.80 billion over the six month period. The increase in current liabilities is accounted for by increases in outstanding tax and dividend obligations. At the end of the second quarter, a tax liability of N27.85 billion was outstanding and a dividend obligation of N8.48 billion was yet to be paid.

    The overall cash flow position of the company improved at the end of the second quarter with net decrease in cash and cash equivalents falling from N19.73 billion to N1.23 billion. The major developments in this regard include a leap in cash generated from operating activities from N21.98 billion in June 2012 to N41.45 billion at the end of June 2013. This was reinforced by a drop in taxes paid during the period.

    The company’s cash flow remains constrained by repayment of loans and borrowings, interest and dividend payments and an increase in prepayments. Acquisition of new property, plants and equipment continues to gulp cash resources though a drop from N18.19 billion spent for same in the second quarter of 2012 to N12.53 billion in June 2013 has helped the company to make a good progress in rebalancing its cash flow position.

  • NB unveils Gulder campaign

    Nigerian Breweries Plc’s, Gulder Lager, has unveiled a new television commercial tagged: The Ultimate Arrival. The commercial spans over four minutes.

    Gulder’s new TVC was unveiled to a selected pool of reporters; for the first time. Later, it was unveiled on select television stations for the first time. A 360 degree teaser campaign’ involving social media, radio and print adverts – preceded the formal unveiling of the TVC; and it kept Nigerians guessing for several weeks as to what The Ultimate Arrival entailed.

    Mr Yusuf Ageni, the Corporate Affairs Adviser, Nigerian Breweries Plc., represented by Mr Edem Vindah, Corporate Media and Brand PR Manager, praised the novelty of The Ultimate Arrival TVC. He described the commercial as: “The first of its kind television commercial, a different kind of advertising which highlights a different way of doing beer advertising in Nigeria.” He added that it would be the main component of the Gulder brand campaign for the rest of the year.

    Ageni pointed out that Gulder was not in the process of re-branding. He said: “Please note that this is not rebranding but a continuation of a brand story built on the values of Gulder as reflected in our current Out-Of-Home advertising. The new campaign has the theme: “The Ultimate Arrival” which reinforces the brand’s proposition. The advertising is designed to reflect the brand positioning while pinpointing the credential attributes of the brand.”

    The campaign script of the TVC was written by Insight Communications and produced by RedDot while the music sound track ‘Fever’ was performed by Elvis Presley. Landmark shots, such as the National Arts Theatre and the Sea Port, both in Lagos, were showcased; while the Lagos traffic also depicted that the Gulder Man is an inhabitant of the earth.

    The Corporate Affairs Adviser also highlighted the aspiration of the Gulder brand. He noted: “Let me re-emphasise that the ambition of the Gulder brand is to remain the number one national premium beer, driving top line growth through innovation and playing a significant role in the life of its consumers. We constantly conduct research on the Gulder brand, consumer perception and the expectation of our current and potential consumers and we are delighted that we have done and are always doing the right things.”

    Fielding the question on whether there was a deviation from the brand values of Gulder adventure, confidence, valour and bravery, in the new TVC, Mr Emmanuel Agu, Marketing Manager, Gulder, Legend and Life, Nigerian Breweries Plc., asserted that the view was incorrect.

    He explained that The Ultimate Arrival TVC showcases of the Gulder Man’s lifestyle and relationship does not take away the brand essence and values of Gulder.

    Mr Agu added that Gulder is being repositioned as a national premium brand to meet the needs of male and female consumers that yearn and aspire for success and achievements.

    Mr Onyeka Okoli, the Senior Brand Manager, Gulder Nigerian Breweries Plc., also shed more light on the assertion that the commercial was elitist and lengthy, given its four-minute length.

    He explained that The Ultimate Arrival would still be broken into minute-long commercials with different themes; but the full length would be aired only once. The Senior Brand Manager also added: “The Ultimate Arrival commercial showcases achievement and success, and our goal as brand handlers is to position Gulder as a national premium brand that can be enjoyed by all that aspire to attain great feats and record accomplishments.”

    Mr Sam Osunoko, Account Management Director, Insight Communications Ltd., described Gulder as a mature brand that appeals to young adults who aspire for greatness.

  • All-Share Index crosses 35,000 mark since 2008 – NSE

    All-Share Index crosses 35,000 mark since 2008 – NSE

    The Nigerian Stock Exchange (NSE) reported on Friday that its All-Share Index crossed to 35,000 mark for the first time after the capital market crashed in 2008.

    The News Agency of Nigeria (NSE) reports that the index appreciated by 606.95 points or 1.76 per cent to close at 35,109.33 on Friday from the 34,502.38 posted on Thursday.

    Similarly, the market capitalisation, which opened at N11.03 trillion, grew by N194 billion to close at N11.23 trillion as a result of price appreciation.

    Guinness led the gainers’ table by N7.87 to close at N274.02 per share.

    Dangote Cement appreciated by N6.80 to close at N185, while UACN inched by N5.88 to close at N64.68 per share.

    Total gained N5 to close at N143, while Nigerian Breweries rose by N1.49 to close at N161.50 per share.

    Analysts attributed the renewed interest in the equities to improved first quarter results released by some companies this week

    They also attributed the new interest to the dividend of N1.50 and bonus of one for five shares proposed by UACN in the 2012 financial year.

    Conversely, Beta Glass topped the losers’ chart by 67k to close at N10 per share.

    Ashaka Cement dipped by 45k to close at N23.30, while ETI lost 24k to close at N15.21 per share.

    RT Briscoe dropped 18k to close at N1.62, while UBA Capital lost 12k to close at N1.08 per share.

    NAN reports that the volume of shares traded appreciated by 89.10 per cent due to the exchange of 573.47 million shares worth N5.41 billion in 4,958 deals.

    This was against the 303.26 million shares valued at N3.75 billion traded in 5,756 deals on Thursday.

    UBA was the toast of investors, accounting for 362.55 million shares worth N2.54 billion.

    Skye Bank sold 33.01 million shares valued at N190.59 million, while FBN Holdings recorded a turnover of 22.20 million shares worth N434.12 million.