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Despite intensive advertising, International Breweries reported lower revenue and a loss

Despite aggressive marketing and advertising strategies in 2019, International Breweries Plc reported a drop in revenue and a loss.

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Despite intensive advertising, International Breweries reported lower revenue and a loss 

By all means, International Breweries Plc was very aggressive with its marketing and advertising strategies in 2019. However, it appears that the effort did not quite reflect in the brewer’s bottom line. This is because not only did revenue drop, there was a loss after tax of N9.1 billion in Q4 2019.

International Breweries is the second-largest brewer in Nigeria in terms of market share, having overtaken Guinness Nigeria Plc last year. As you can expect, aggressive advertising has been majorly instrumental in this regard. But advertising can be expensive. In Q4 2019 alone, the company incurred more than N6 billion in advertising costs.

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Belgium’s AB InBev to invest about N123 billion as International Breweries seeks funding ,International Breweries Q4 2019 result shows 5.8% revenue drop and a N9.1 billion loss

According to information obtained from the company’s unaudited Q4 2019 financial report, advertising expense was 64.9% more than N4.2 billion, which was recorded during the comparable period in 2018.

Money well spent?

The company’s adverts were dropping everywhere throughout last year. Across media platforms such as radio, TV, print, and on the internet, beer drinkers were bombarded with communication messages encouraging them to patronise the brand.

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International Breweries also made copious use of celebrity endorsements to push its brands, including Budweiser, which it describes as the “king of beers”.

[READ MORE: International Breweries’ Q4 2019 result shows 5.8% revenue drop, N9.1 billion loss)

At the end of the year, the company did sell its products, but not as much as it expected to. Total revenue for the 3-month period ended December 31st stood a little bit above N35 billion, indicating a 5.8% decrease when compared to N37.3 billion that was recorded in Q4 2018.

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Although the ads were everywhere, very colourful and fascinating as they were, they did not quite translate to more sales, let alone an increase in profit.

What could be responsible for the huge loss

International Breweries Plc has yet to offer an explanation as to what is responsible for the recorded under-performance. Results for the three quarters ended September 2019 showed a loss after tax of N16.4 billion, even as operating expenses grew significantly by 33.1% to N33.1 billion, driven mostly by a surge in marketing promotion expenses and administrative expenses. See here.

Perhaps the company will offer a full explanation when it releases its audited financial statement for full-year 2019.

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In the meantime, it should be noted that the company reported net finance costs of N9.2 billion in Q4 2019. The administrative expense for the period stood at N8.2 billion as against N3.7 billion in Q4 2018.

The company’s stock closed Tuesday’s trading on the Nigerian Stock Exchange at a share price of N7.05.

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Patricia

Emmanuel covers the financial services sector for Nairametrics. Do you have a scoop for him? Well then, contact him via his email- [email protected]

2 Comments

2 Comments

  1. Paul Ovat

    February 19, 2020 at 1:29 pm

    Welldone on the analysis.

    Below is my personal opinion of the IB results.

    – Potential investors should give consideration to the just concluded right issue, which will significantly lower finance charges to around 5billion in 2020, thus net profit will become positive. This will make it one of the lowest in its industry
    – The company is still largely competing to gain market share, increase in marketing expense maybe driven by this.

  2. Kasa

    February 19, 2020 at 4:01 pm

    Advertising is not everything afterall

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Companies

Lafarge Africa Plc. announces its board meeting and closed period for Q2 2020 

The notification which was duly signed by General Counsel & Company Secretary.

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Lafarge Africa

Lafarge Africa Plc. notified the Nigerian Stock Exchange and the investing public that he closed period will commence on Wednesday, 8th July 2020 until the unaudited financial statement for the second quarter ended 30th June 2020, is released to the Nigerian Stock Exchange. 

In a disclosure on the Nigerian Stock Exchange, it wrote: “We hereby notify the Nigerian Stock Exchange and the investing public that a meeting of the Board of Directors of Lafarge Africa Plc has been scheduled to hold on Thursday, 23rd July 2020 to consider the second quarter financial results of the Company for the quarter ended 30th June 2020.”  

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The notification which was duly signed by General Counsel & Company Secretary, Mrs. Adewunmi Alode explained further stating that “Accordingly, no Director, employee, persons discharging managerial responsibility and Advisers of the Company and their connected persons may directly or indirectly deal in the shares of the Company in any manner during the closed period.” 

Over the past few months, it made a few board changes with the retirement of two of its Non-Executive Directors, as well as the appointment of three new DirectorsIt had also spun off its South African subsidiary, Lafarge South Africa Holdings (LSAH), last year. 

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READ MORE: NSE’s statement in reaction to the Visionscape Municipality Bond Default

Lafarge Africa’s Q1 2020 revenue was up 9.8% year-on-year to N63.7 billion, driven by higher Cement Sales (a figure up 11% year-on-year to N62.3 billion) which offset the weakness in Aggregate and Concrete (down 21% y/y to N1.4bn). Its EBITDA grew by 2.4% year-on-year to N19.3 billion as well. As at Tuesday the 7th of July, the share price of the company was N10.00 

 

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Companies

AXA Mansard Insurance Plc gives notice of Annual General Meeting 

The AGM will be live-streamed to enable shareholders and stakeholders participate.

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AXA Mansard Insurance Plc

Insurance firm, AXA Mansard Insurance Plc., has given notice of its board of its Annual General Meeting (AGM) scheduled for Wednesday, July 29, 2020, at 10:00 a.m.  

The announcement which was disclosed by Nigerian Stock Exchange (NSE) in a corporate disclosure on July 7th, 2020 and signed by Company Secretary, Omowunmi Mabel Adewusi read, “Notice is hereby given that the twenty-eighth annual general meeting of AXA Mansard Insurance Plc. will hold at the Oriental Hotel, no. 3, Lekki Road, Victoria Island, Lagos on Wednesday, July 29, 2020, at 10:00 a.m.” 

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READ ALSO: AXA Mansard divests from its pension and real estate ventures

As noted, the purpose of the AGM is to transact the following business: 

  1. To receive the Audited Financial Statements for the year ended December 31, 2019, and the Reports of the Directors, Auditors and Statutory Audit Committee thereon 
  2. To authorise Directors to fix the remuneration of the Auditors 
  3. To elect Directors and 
  4. To elect members of the Statutory Audit Committee.  

In order to ensure that all relevant stakeholders can be a part of the AGM, the company will also be streaming the AGM live. It noted that “This will enable shareholders and other stakeholders who will not be attending physically to follow the proceedings.” 

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The link for the live streaming of the Meeting will be made available on the Company’s website at www.axamansard.com. 

READ MORE: Sterling Bank’s earnings to remain pressured but valuations still attractive

Recall that a few months ago, in March, the company’s Board of Directors announced the appointment of John Dickson as the company’s new Non-Executive Director. A month earlier, it also disclosed its plan to sell its pension management subsidiary (AXA Mansard Pensions Ltd) and some undisclosed real estate investments. 

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Its unaudited financials for the period Q1 2020 reveal a growth across revenue and profit lines. Gross written premium grew by 21% from N17.4 billion earned in Q1 2019 to N21 billion in Q1 2020. Profit for the year for the group grew by a commendable 120% from N890 million in Q1 2019 to N1.9 billion in Q1 2020. 

As at Tuesday, the 7th of July when markets closed, the share price of the company was N1.59. The company’s EPS stood at 0.33 while its price to book ratio stood at 0.6082. 

 

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Companies

NSITF board to investigate suspended MD and others over financial misconduct

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NSITF, FG moves to scrap hazard allowances earned by State Governors

The board of directors of the Nigerian Social Insurance Trust Fund (NSITF) has revealed that it will investigate the activities of the suspended Managing Director, 3 Executive Directors, and 8 other senior management staff over financial breaches and gross misconduct.

This was disclosed by the Chairman of the board of NSITF, Mr. Austin Enajemo-Isire, in a statement in Enugu on Sunday July 5, 2020.

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Enajemo-Isire said that the Managing Director and other top management staff of the organization would have the opportunity to clear themselves of any wrongdoing with the probe panel which was being set up.

READ MORE: Ecobank appoints Aissatou Djiba Diallo to oversee its fintech initiatives 

While reacting to claims that the suspension did not follow due process as President Muhammadu Buhari did not approve it, Enajemo-Isire said that the approval for the suspension of the affected staff had been conveyed to the Labour Minister in a correspondence referenced SGF. 47/511/T/99 of June 30, 2020.

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According to the Chairman, “The minister has conveyed this approval and directives to me for necessary action in terms of setting up a board-driven investigative panel.

READ MORE: Nigeria’s debt rises to $79.5 billion, as debt to revenue ratio worsens

“This is to give the affected officers the opportunity to clear themselves of the financial and procurement breaches and acts of gross misconduct and other infractions that gave rise to their prima facie indictment.

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“It is in this light that I have decided to call a virtual meeting of the management board on Tuesday, July 7, 2020, to consider the modalities for our action.”

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He, therefore, appealed to staffers of NSITF and their social partners to keep calm and exercise restraint.

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A few days ago, Nairametrics reported the suspension of the Managing Director and some senior management staff over corruption allegations. However, the management in its reaction debunked that claim and said that the President did not approve their suspension but that rather, it was the sole decision of the Labour Minister, Chris Ngige, who they said was overreaching himself.

Patricia
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