An astounding N28.6 billion was lost by International Breweries, one of the well-known beverage firms in Nigeria, during the nine months that ended in September 2023. This is a big increase in net loss. Several financial difficulties were the cause of an additional loss of around N5 billion that was disclosed in the company’s unaudited financial report for the third quarter.
One of the key contributors to the losses was the substantial finance costs amounting to N6.8 billion on the company’s N320 billion debts. Additionally, a 288 percent surge in tax expenses, totaling N2.9 billion, and a foreign exchange loss of N2.9 billion further weakened the operating profit in the third quarter.
Despite experiencing a loss reduction compared to the previous quarter, where a net loss of N21.3 billion was recorded, the third quarter still posed significant financial challenges. The reduction in losses was primarily driven by a decrease in foreign exchange losses from approximately N42 billion in the second quarter to N2.9 billion in the third quarter.
The company did showcase some positive signs, with improvements in sales and cost controls. The third quarter saw a turnaround from an operating loss of N3.9 billion in the same period last year to an operating profit of N2.3 billion. Sales revenue growth also strengthened, reaching a notable 38 percent rise to N67.6 billion in the third quarter, the highest quarterly sales delivery of the year.
Management efforts to support sales through cost controls were evident, as production costs grew slightly below sales revenue in the third quarter at 37 percent to N53 billion. This moderate cost-saving approach contributed to an improvement in earnings, with gross profit increasing by 41.4 percent to N14.6 billion in the third quarter.
However, the financial landscape posed challenges from the surge in finance costs, multiplying more than five times in the third quarter, and an increase in tax expenses. Despite the commendable efforts to control operating costs, these financial pressures impacted the company’s overall performance.
The nine-month earnings position for International Breweries reflects a turnover of N183.8 billion, a 14.6 percent increase compared to the same period last year. Production costs also grew at a higher pace than sales, rising by 17.8 percent to N145 billion over the nine months, indicating the ongoing financial challenges the company is navigating.
