International Breweries Plc has released its 2021 FY Audited Financial Statement, revealing a loss after tax of N17.66 billion from a loss of N16.06 billion in the corresponding period of 2020. Meanwhile, Revenue for the period raked in N182.30 billion, representing a growth of 33.27%.
This shows that the brewery has declared bottom line loss for three consecutive years since 2018, posting a loss of N3.93 billion. In 2019, the loss declared spiralled by an overwhelming 607% to N27.79 billion, to decline in 2020 to N16.08 billion. Within the three years, the company grew its revenue by over 51% on the back of inflationary pressures driven by increases in prices of goods and services over the years.
The back-to-back declaration of losses might suggest that the company lacks efficient cost management practices as the three audited period shows significant increase in Employee benefits expenses, Depreciation, and Amortization.
In the FY 2021 period ended December 2021, the third most-capitalized brewery recorded revenue growth on the back of the inflationary pressures during the period, which most Fast-moving consumer goods (FMCGs) benefitted from, especially during the festive season.
Key highlights of the report
- International Breweries Plc generates its revenue from contracts with customers, which is distinguished between Key accounts and Distributors.
- Revenue from Distributors made up 96.80% of the company’s total sales, appreciating by 31.32% from N134.38 billion to N176.46 billion. While revenue from Key accounts stood at N5.84 billion.
- Other Income for the period was generated mainly through the sale of scraps, and Royalty received from Accra Breweries Ltd, which were both recorded as N22.16 million and N152.39 million, respectively.
- Advertising and sales promotion expenses grew by 57.85% from N8.82 billion a year earlier to N13.92 billion suggesting that aggressive marketing and distribution was a contributor to the driver of sales.
- Interest income on bank deposits was recorded as N3.01 billion, while net finance costs stood at N1.79 billion during the period.
- Administrative expenses grew by 28.56% from the prior-year period, subduing bottom line performance for the period, recorded as N35.89 billion.
- During the period, income tax credit declined by 82.57%, supporting bottom-line income.
- The company’s total assets are now at N469.95 billion, net assets declined by 10.83% to N135.50 billion.
International Breweries Plc is currently trading at N4.40 per share and its market capitalization stands at N118.19 billion as at Thursday, March 31, 2021. Year-to-date performance shows that the share price of the company has lost 11.11%.
It seems to me that the company management is not very disciplined. How can you be increasing employees’ benefits when the company has been sustaining heavy losses in recent years. If the company’s main sales strategy is to offer products at bottom prices, then why spend so much on advertisement and promos. The management needs to double down on all departments to ensure they are operating within their respective cost and profit thresholds necessary for returning the company to profitability.
That company has never been profitable even when the founder was alive.