International Breweries Plc (NSE: Intbrew) loss from continuing operations worsened in the first half of 2020 according to the company’s Unaudited Condensed Financial Statements for the 6 months ended 30th June 2020, released to the Nigerian Stock Exchange and the investing public.
Intbrew’s revenue for the period declined by 11.06% to N60.614 billion from N68.631 recorded in the same period in 2019, whereas the loss for the period deepened by 36.77% to N9.357 billion from N2.842 billion. It is notable that Intbrew recorded a loss of N9.357 billion in H1 of 2020 despite receiving a tax credit of N2.625 billion.
A closer look at the Statement of profit or loss and other comprehensive income showed that the cost of goods sold took a huge chunk of the company revenue to the tune of N51.075 billion; 84.26% of the revenue. Thus the Gross profit margin was 15.74% (N9.539 billion) only.
The company’s administrative expenses of N10.702 billion alone was enough to wipe out the gross profit registered in H1 2020. Intbrew recorded other categories of expenditures such as, marketing and promotion expenses (N5.271 billion), other (expense)/income (N4,601 billion), Finance cost (N2.279 billion) etc.
The company would have reported more loss than it did if not for the 67.58% reduction in finance cost to N2.279 billion from N7.030 billion in H1 2019.
In May 2020, Intbrew took out a new hedge instrument to protect the volatility of foreign exchange movements on the outstanding loan balance. Fair value loss recognized within Reserves is N9,040 billion thus, the company’s total comprehensive loss for the period stood at minus N18.397 billion.
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A review of Intbrew statement of financial position showed that the total assets of the company declined by 2.92% to N354.501 billion year to date. This is largely due to a decline in the value of the company’s Property, plant and equipment.
Under liabilities, N149.753 billion borrowings recorded under non-current liability by the company as at 31 December 2020 has been totally wiped out, as zero non- current borrowing was recorded in the period in review.
Commenting on the borrowing the company said “A balance of a loan amounting to $278m which was obtained in 2018 with maturity date of May 2021. The Company has entered into non deliverable forward contracts to mitigate the forex risk on the contractual interest and principal repayments. There is also a loan (revolving credit facility) of N57 billion that has not been drawn down by the company as at end of the reporting period.”
Intbrew sits on a total liability of N202.659 billion as at 30 June 2020. The company however, has a strong cash flow. The cash and cash equivalents as at 30 June 2020 stood at N31.628 billion, boosted by a N31.806 billion cash and cash equivalents at 1 January 2020.
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Intbrew is into the business of brewing, packaging and marketing of alcoholic and non-alcoholic beverages. At the close of trade on Friday the share price was N3.40 per share. YTD the share price is down by 64.21% while in 2 years and it is down by 90.81%.
The six year price movement is shown below.
Source: Mytradebook from Greenwich Securities Limited
Written by
Ifunanya Ikueze
