INTERNATIONAL Breweries Plc, in its unaudited results for 2023, has widened its loss as it recorded a pre-tax loss of N87.64 billion, marking a 226 percent decline from the N26.84 billion loss before tax posted in FY 2022.
This is attributable to the company’s foreign currency liabilities on its balance sheet, resulting in huge losses due to a rapid depreciation of the Nigerian naira.
The company recorded a 21 percent increase in turnover to N264.28 billion, from N218.65 billion in 2022. In Q4 2023, the company’s revenue of N80.50 billion marked a 38 percent year-on-year increase from the N52.22 billion posted in Q4 2022.
The company was a major victim of the naira devaluation in 2023, as it recorded a net foreign exchange loss of N72.47 billion in 2023, representing a 437.6 percent decline from the N13.47 billion net FX loss recorded in 2022.
According to the company’s unaudited financial statement for 2023, annual loss expanded to about N59.5 billion, a steep increase from N21.63 billion posted in 2022.
The push came from a more than 176 year-on-year increase in the company’s finance costs. The strength of its finance income growth failed to upturn net finance income as a loss sustained from FX revaluation darkened performance.
With about 21 percent year-on-year growth apiece, the figures showed that both revenue and costs of sales moved in a similar direction amidst rivalry in the breweries sector. International breweries annual revenue surged by about 21 percent to N264 billion.
Also, the costs of sales climbed 21 percent to N211 billion at the same time. This left International Breweries’ gross margin unchanged at 20 percent, clouded by escalating overhead costs amidst rising headline inflation in Nigeria.
Its Q4’2023 standalone result showed a higher loss per share of N1.26 versus a loss per share of N0.84 in Q4’2022. In the last quarter of 2023, International Breweries’ revenue expanded by 38.3 percent with the notable increase attributed to price hikes.
The elevated costs are primarily due to higher energy prices, FX illiquidity constraints, commodity cost headwinds and inflationary pressures. For context, analysts said the company recorded a 24.1 percent year-on-year increase in raw materials consumed and allocated overheads.
The brewer’s operating loss settled at N35.84 billion in Q4’2023 as against an operating loss of N22.99 billion in Q4’2022, driven by a substantial 234.2 percent increase in FX loss. Its exposure turned red as FX losses hit N33.60 billion from N10.05 billion in the fourth quarter of 2022.
Net finance costs increased significantly, following higher finance costs, up by 176 percent arising from interest on borrowings and a decline in investment income.
The increase in interest expenses is attributed to the brewer’s heightened reliance on loans and borrowings during the period, notably, with loans and borrowings surging to N376.09 billion in 2023 from N194.08 billion in 2022.
Details from its scorecard revealed that pre-tax loss increased to N44.14 billion in Q4-2023 versus pre-tax loss of N24.19 billion in Q4-2022. Consequently, the loss after tax settled at N33.80 billion following a tax credit of N10.34 billion.
Despite the impressive top line growth, the brewer’s performance in the period was significantly impacted by high finance costs and FX illiquidity.
