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International Breweries started the year on a bounce hitting a high of N52.26 and about two weeks later it hit an all-time high of N58.69. Shareholders who still own the stock will remember this was in January 2018.

It’s been downhill since then, closing 2018 at N27.97 a 46.4% negative return and one of the worst performers that year. As if things couldn’t get any worse, shareholders faced another tumultuous 2019 with the stock closing 2019 at N9.4 and a negative return of 69%

With that, Nigeria’s second-largest brewer by revenue, International Breweries has ended 2019 with the unenviable record as the worst-performing stock of the year.

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Merger Blues: The company’s challenges appear to have started following its 2018 merger with Intafact Beverages Limited and Pabod Breweries Limited. The first sign of merger blues was an immediate spike in operating costs.

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Poor results: Perhaps a major reason for the company’s poor performances has been its string of poor results particularly in its bottom line. As of 9 months, results for 2019 losses had ballooned to N16.4 billion from N3.8 billion at the end of 2018. Despite a notable rise in revenue (helping knock of Guinness from the number 2 spot), its rising cost of marketing and administrative expenses has continued to eat into gross profits.

Another cause for worry is its debt profile. External debts were now N243 billion over 13x its net assets. This is why it announced plans for a rights issue at an offer price of N9 per share back in October 2019. The company did not reveal further details on the rights issue, especially how much it seeks to raise.

So many board changes: Intl. Breweries have also rung out a string of board changes since the merger in 2018. Firstly, in 2018 it announced the composition of a new board of directors a sequel to the merger of Intafact Beverages Limited and Pabod Breweries. The new board chaired by Igwe Naemeka Alfred Achebe replacing Mr. Sunday Omole, who stepped down as the chairman of the company.

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Shareholders also approved the appointment of Annabelle Degroot as the new Managing Director. Degroot was the Managing Director of Zambian Breweries Plc prior to joining IB Plc. Zuber Momoniat was also appointed Finance Director of the company. He was the Finance Manager at PABOD Breweries Limited (Subsidiary of ABInbev) from where he was appointed as the Finance Director for International Breweries Plc. Later that year it welcomed Mr. Andrew Scott Murray into its fold in the capacity of a Non-Executive Director.

By early 2019 it appointed Richard Rivett-Carnac as a Non-Executive Director. Rivett-Carnac replacing Phillip Redman who resigned his appointment as a Non-Executive Director of the company. In May 2019 it appointed Olutoyin Modupe Odulate as its Non-Executive Director.  In September 2019, the Board of Directors announced the appointment of  Tolulope Adedeji as a Director replacing Godwin Oche.

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By December 2019, it again announced the resignation of two of its directors – the Managing Director, Annabelle Degroot and the Finance Director, Zuber Momoniat both of whom were appointed in 2018. In came Hugo Dias Rocha and Bruno Sambrano Arana. While Rocha will be replacing Degroot as Managing Director, Arana will replace Momoniat as Finance Director. All these board changes may have also contributed to the performance of the company and its share price.

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Nigeria’s Brewery sector is a very challenging space and could only get worse in the coming months and years. The next decade could be defining for beer makers following the change in social behaviour and taste of Millenials and those after them. Beer wars are a race for market share but it could well end up being a race to the bottom.

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