For the third year in a row, International Breweries posts reports of loss

International Breweries Plc has released its Audited Financial Statement for the fiscal year 2021, which shows a loss after tax of N17.66 billion, up from N16.06 billion in the previous year. Meanwhile, revenue for the period totaled N182.30 billion, up 33.27 percent over the previous year.

This demonstrates that the brewery has lost money for three years in a row, with a deficit of N3.93 billion in 2018. In 2019, the claimed loss increased by 607% to N27.79 billion, before declining to N16.08 billion in 2020. On the back of inflationary pressures caused by rises in the prices of goods and services over time, the company increased its revenue by almost 51% in just three years.

The company's back-to-back loss declarations may indicate that it lacks effective cost management techniques, as the three audited periods show considerable increases in Employee benefits spending, Depreciation, and Amortization.

The third most-capitalized brewery saw revenue increase in the fiscal year that ended in December 2021, owing to inflationary pressures that benefited most fast-moving consumer goods (FMCGs), particularly during the festive season.

Key takeaways

Contracts with clients, which are divided into Key accounts and Distributors, create revenue for International Breweries Plc.

Distributors' revenue increased by 31.32 percent from N134.38 billion to N176.46 billion, accounting for 96.80% of the company's total sales. Key accounts brought in N5.84 billion in income.

The sale of scraps and royalties received from Accra Breweries Ltd, which totaled N22.16 million and N152.39 million, respectively, were the main sources of other income for the period.

Advertising and sales promotion expenses increased by 57.85% from N8.82 billion to N13.92 billion, indicating that aggressive marketing and distribution were a factor in sales growth.

Interest revenue on bank deposits was N3.01 billion during the period, while net financing expenses were N1.79 billion.

Administrative expenses increased by 28.56 percent from the previous year, lowering the bottom-line performance to N35.89 billion.

During this time, the income tax credit fell by 82.57 percent, boosting bottom-line earnings.

The company's total assets have decreased by 10.83 percent to N135.50 billion, while its net assets have decreased by 10.83 percent to N469.95 billion.

As of Thursday, March 31, 2021, International Breweries Plc is trading at N4.40 a share, with a market capitalization of N118.19 billion. The company's share price has dropped 11.11 percent in the first half of the year.