Champion Breweries Plc (NSE Ticker: CHAMPION) has joined the list of companies in Nigeria to be heavily impacted by the lockdown imposed due to Covid-19 pandemic. Champion Breweries suffered over 100 percent drop in profit after tax in the second quarter, as the company slipped back into losses. This is according to the Unaudited Condensed Interim Financial Statements for the Six months ended 30th June, 2020 released to the Nigerian Stock Exchange and the Investing public.
CHAMPION revenue declined by 2% in the first half of 2020 to N3.374 billion from N3.448 in H1 2019. While profit after tax slumped by 42% to N120.107 million from N208.847 million reported in H1 2019.
A close look at the profit or loss statement of the company showed that, the cost of sales took 63.8% of the revenue (N2.153 billion), thus gross profit amounted to N1.232 billion (36.2% gross profit margin). Although gross profit declined by just 1%, the 29% increase in Selling and Distribution Expenses to N742.493 million from N575.927 million in H1 2019 largely contributed to the huge slump in profit.
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CHAMPION reported a loss in the second quarter on the year (April to June). The company’s profit dipped by 118% to minus N18.288 million from the N99.110 million posted in Q2 2019, following a 12% drop in revenue for the same period in 2020. CHAMPION’s revenue declined to N1.427 billion in Q2 2020 from N1.626 billion in Q2 2019.
A review of the company’s balance sheet revealed that total assets rose by 4% to N11.414 billion as at 30 June 2020, from N10.981 billion as at 31 December 2019. This is mainly due to an increase in trade and other receivables component of the asset column. which increased to N1.298 billion from N885.989 million as at 31 December 2019.
In line with assets, the total liability rose by 11% to N3.262 billion from N2.950 billion due to increases in;
- Current tax liabilities rose to N202.992 million from N34.902 million in December 2019.
- Trade and other payables rose to N2.300 billion from N2.024 billion in December 2019.
It is notable that 71.4% of CHAMPION’s total assets is financed by equity. Major components of the company equity is share capital – N3.915 billon and other reserves – N3.702 billion. The company has been able to clear its accumulated loss during the period in review.
CHAMPION posted a positive net cash of N622.322 million from its operating activities, with a negative net cash of minus N715.775 million from its investing activities due to acquisition of property, plant and equipment worth N717.125 million. The company did not record any financing activity within the period in review.
As at 30 June 2020, cash and cash equivalents stood at N608.499 million.
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CHAMPION is into the business of brewing, bottling and selling of beer and non-alcoholic drinks. CHAMPION was incorporated on 31 July 1974 and listed on the Nigerian Stock Exchange on 1 September 1983. The share price stood at N0.71 per share at the close of trading on Friday. The 52 week high and low prices are N1.53 and N0.69 respectively. YTD the share price is down by 25.26% while in 2 years and five years it has lost 70.66% and 82.43% of its value respectively.
Seven years share price movement of Champion is shown below;