Nigerian Breweries Plc released its 2013 Q1 unaudited accounts with revenues rising slightly (4.6%) to N64.5billion (2011: N61.76billion). Operating profit at the end of the period dropped 6% to N14.4billion. Pre-tax profits also dropped 3% to N13.6billion.
Highlights
Gross Profit Margins shrank compared to same period last year due to a marginal rise in cost of sale
Operating Expenses as a percentage of Gross profit remains high at 54% slicing further into gross profits.
Finance Cost is well contained at just 11% of operational profit
Total loans of over N50billion is about 28% of Equity which by all means is adequately covered.
The company has cash in bank of over N20billion and generated operating cashflows of about N18.5billion this quarter alone. However, it still retains a negative working capital of about N20.7billion much of which are current tax liabilities (N23.8billion). This portends a worry should the tax authorities step up efforts to recover the money within the year.
Inventory turnover for the period was 1.4x suggesting its stock of beverages are completely sold once over a three month cycle
Return on equity was 5.5% during the quarter which arithmetically suggest a 22% ROE when annualized. If this correct then shareholder returns is well above annual inflation and definitely higher than current bond rates.
Share price is high at N161.5 (3/5/2013) with a price multiple of 32x. Price to book ratio is an astonishingly high 13x as well. Rather than top line growth, the fact that the company is highly profitable and one of the very few well run companies in Nigeria adds to the premium you pay to own this stock. Very few investors will not have this stock in their portfolio. For bargain hunters a N100 share price is ideal….but the last time the stock was priced that cheap was June 8th last year. Incidentally its one year low.
Nigerian Breweries Plc Q1 2013 unaudited accounts was posted on the website of the NSE
