Amid cash crunch, International Breweries suffers N2.3bn loss in Q1
By Sodiq Adelakun
International Breweries Plc (IB Plc), a part of the AB InBev Group, the world’s largest brewer with over 400 beer brands, is facing a challenging period as it grapples with declining revenue and mounting losses in its profit.
The brewery’s loss-after-tax stood at N2.31 billion in the first three months of 2023 compared to a gain of N721.2 million recorded in the same quarter of 2022.
Revenue also recorded a 5.4 per cent decline in the first quarter of 2023 to N54.39 billion from N57.52 billion recorded in the same period of last year.
Cost of sales claimed 82.3 per cent of the manufacturer’s total revenue during the period amounting to N44.75 billion in the first quarter of 2023 from N40.58 billion recorded in the same period of last year.
“We opine that the weakened consumer purchasing power moderated sales volumes as consumers continue to adjust their expenditure pattern in favour of the most basic needs, added to the fact that Q1 is usually a weak quarter for brewers. Again, Q1 2023 was characterised by cash scarcity which must have affected demand,” Goke Adetoyinbo, an analyst at CSL Research said in a statement.
The company’s financial report reveals recurrent losses in profit in the past five years.
The firm’s administrative expenses rose to N9.95 billion in the first three months of the year, 9.4 per cent increase from N9.09 billion recorded in the same period of last year.
Further analysis of the other expenses reported by the beer maker shows a 37.6 per cent decline as a result of an increase in the net exchange gain of N1.2 billion in the three-month period of 2023 from a loss of N3.49 billion in the same period last year.
Due to the interest hikes, finance income stood at N3.43 billion in the first quarter of 2023, a 127.9 per cent increase from N1.51 billion recorded in the same period of last year, while finance cost amounted to N4.57 billion, a 36.4 per cent increase from N3.35 billion in the period reviewed.
The beer maker’s total assets decreased to N481.34 billion in the first three months of 2023 from N484.25 billion recorded in the first three months of 2022.
Cash and cash equivalents held by International Breweries were down by 53.3 per cent in the first quarter of 2023 to N29.32 billion from N62.78 billion recorded in the same period of 2022.
Cash generated from operations during the period was negative amounting to N29.49 billion, from a N6.21 billion gain recorded in the same period of last year, on the back of an increase in impairment loss on financial assets, inventories and interest expense.
