Nigerian Breweries Plc (NSE TICKER: NB) posted its unaudited condensed interim financial statements for the Three Months Ended 31st March 2020 reporting no significant change in Net Revenue. Its revenue for the period in review is N83.20bn it reported N83.27bn revenue for the same period in 2019.
Despite reporting almost the same revenue, the company reported a 31.40% decline in Profit after Tax, recording a PAT of N5.50bn against N8.02bn recorded in Q1 2019. Earnings per Share stood at N0.69 in the year, down from N1.00 in the same period in 2019.
The erosion of their profit was due to the increased marketing and distribution expenses, as well as increase in administrative expenses. A closer review of the result by our analysts showed that the advertising and sales expenses went up by 48.81% to N6.30bn from N4.23bn in Q1 2019.
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The company reported a significant uptick in the interest bearing debt, having sold commercial papers worth N51.05bn to Investors in the quarter in review (Q1 2018: NONE). Its interest bearing debt went up by 411.03% to N53.48bn, from only N10.46bn in the same period in 2019.
About the ongoing Coronavirus (Covid-19) Pandemic, the company had this to say; “The Covid-19 crisis continues to impact all businesses, with the effect expected to be more pronounced in the future. The priority for us is to protect the health, safety and welfare of our employees, customers, and partners, as well as support the Government and its agencies as they work to reduce the impact of the outbreak.
“At this stage, it is not possible to determine the financial impact of Covid-19 on our Company given the lack of visibility on the end date of the pandemic or on how long it would continue to impact the Nigerian economy. The Company has a strong Balance Sheet and the Board and Management are focusing on efforts to mitigate the impact on our business”.
Nigerian Breweries Plc, a public Company quoted on The Nigerian Stock Exchange, was incorporated in Nigeria on the 16th November 1946, under the name, Nigerian Brewery Limited. The name was changed on 7th January 1957, to Nigerian Breweries Limited and thereafter to Nigerian Breweries Plc in 1990 when the Companies and Allied Matters Act of that year came into effect. The Company is a subsidiary of Heineken N.V., a company domiciled in the Netherlands, the latter having approximately 56% interest in the equity of Nigerian Breweries Plc. The address of the Company’s registered office is 1, Abebe Village Road, Iganmu Lagos.
NB has a total of 7,996,902,051 outstanding shares, and a market capitalization of N275.89bn.
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NB shares has seen a very significant erosion of value over the past 5 years; YTD it is done by 41.53%, down 72.36% over 3 years, and down 78.03% over 5 years. Although the stock has risen 34.50% over the past month, we do not expect it to remain so.
An analysis of their full year report for the period ended 31st December 2019, led us to estimate the fair price to be between N9.80 and N19.75. The stock currently trade at N34.50, well above the upper range of the estimate fair value. We therefore rate the stock a NO BUY.
Written by:
Basil Maduakor
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