Nigerian Breweries Q2 2018 Results - PAT Declined By -33% YoY and -19% QoQ Respectively

Proshare

Tuesday, June 31, 2018 /11:25AM/FBNQuest Capital

Event: Nigerian Breweries reports Q2 2018 results

Implications: Q2 PBT and PAT of N12.3bn and N8.2bn both declined -26% y/y and -33% y/y respectively. Notwithstanding, we expect a slightly negative-to-neutral reaction by the market because on an annualised basis, H1 PBT of N27.6bn is broadly in line with consensus estimate of N54.6bn.   

Positives: Q2 sales of N89.7bn grew 8% q/q and beat our estimate by 5%. Net interest expense declined by -53% y/y.

Negatives: Q2 PBT declined y/y and q/q by -26% y/y and -19% q/q respectively. Additionally, PAT declined by -33% y/y and -19% q/q respectively. According to Heineken’s (NB’s parent) trading statement, unit volumes for Nigeria declined by mid-single digits during the period. This suggests that NB raised prices to offset unit volume weakness. Nonetheless, Q2 gross margin contracted by c.-341bps y/y to 42.4%.

We rate the shares Neutral. Our estimates are under review.

Nigerian Breweries Q2 2018 results: actual vs. FBNQuest Capital Research estimates (N millions)

Q2 2018

H1 2018

 

Actual

Y/y

Q/q

FBNQuest Capital est.

Act. vs      FBNQuest Capital est (%)

Actual

Y/y

FBNQuest Capital est.

Act. vs      FBNQuest Capital est (%)

Sales

89,694

0.0%

8.1%

85,235

5.2%

172,660

-5%

168,201

2.7%

Cost of sales

-51,631

6.3%

14.9%

-46,538

10.9%

-96,579

-2.6%

-91,486

5.6%

Gross profit

38,063

-7.4%

0.1%

38,697

-1.6%

76,081

-7.0%

76,715

-0.8%

-Gross margin

42.4%

-341bps

-339bps

45.4%

-296bps

44.1%

-114bps

45.6%

-154bps

Dist. and admin. exp

-24,324

7.5%

18.2%

-20,456

18.9%

-44,896

1.3%

-41,028

9.4%

Operating profit

13,739

-25.7%

-21.2%

18,240

-24.7%

31,185

-16.8%

35,686

-12.6%

Other income

213

-86.8%

-2.3%

261

-18.3%

431

-76.3%

479

-10.0%

Net interest expense

-1,653

-52.7%

-31.6%

-2,913

-43.3%

-4,068

-22.7%

-5,328

-23.7%

Net gain/ loss on fx

0

n/a

n/a

0

n/a

0

n/a

0

n/a

PBT

12,300

-26.0%

-19.3%

15,588

-21.1%

27,549

-19.1%

30,837

-10.7%

-PBT margin

13.7%

-482bps

-467bps

18.3%

-457bps

16.0%

-286bps

18.3%

-238bps

Tax

-4,069

-5.8%

-19.4%

-4,676

-13.0%

-9,114

-11.6%

-9,721

-6.3%

-Tax rate

33.1%

710bps

0bps

30.0%

308bps

33.1%

282bps

31.5%

156bps

PAT

8,231

-33.1%

-19.3%

10,912

-24.6%

18,435

-22.4%

21,116

-12.7%

- PAT margin

9.2%

-454bps

-312bps

12.8%

-362bps

10.7%

-245bps

12.6%

-188bps

 

 


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