The Board of Directors of Nigerian Breweries announced it will be meeting on Wednesday the 21st of October to decide on dividend payments. Nigerian Breweries paid dividend of N3.5 per share back in May 2015 following a full year profit of N42.5 billion. The brewery giant also paid an interim dividend of N1.25 in November 2014 as it continued to return some cash back to shareholders.
How much will it declare?
Last year the company declared a final dividend of N4.5 which was N1 higher than what it declared this year. The drop in dividend this year is not surprising considering that profits was flat in 2014 compared to a 13% rise in 2013.
The question now is whether interim dividend will drop similarly or if the N1.25 it paid last year will be repeated. Whatever decision it makes will boil down on cash and how much it has available to distribute to shareholders. Last year, NBL had about N4.2 billion in the bank when it announced its H1 results and had paid down debt of about N11.2 billion. Its net debt was N30.9 billion. By the end of Q3 it had about N7.2 billion in the bank up from N4.2billion in the prior quarter. It also took on another N16 billion debt and paid dividends from there.
Contrast this to 2015 where it had a cash balance of about N2.9 billion and net debt of about N44.5 billion. If it plans to match last year’s interim payout of about N7.2billion, profits will have to be not just good but backed up with some cash. Fourth quarter is typically the strongest for the brewer and if it repeats the N30 billion in operating cash flows it banked last year shareholders may at least be sure of another N1.25 dividend. However, recent trends indicate third quarter results will be lower than what it reported in the same period in 2014. We also don’t expect fourth quarter results to top the N12.6 billion it reported same period last year. If things turn out as bad as we think then we could hear an interim dividend of N1 by Wednesday.
Get the press release here
