The brewer announced a 31.4% YoY plunge in earnings to N5.5 billion in its Q1’20 unaudited results. The numbers suggest weaker cost efficiency and pressured operating cash flow.
The company in Q1 2020 recorded a decrease of 27.8% and 31.4% in Profit Before Tax (PBT) and Profit After Tax (PAT) respectively, with PBT declining from ₦11.46 billion to ₦8.28 billion and PAT declining from ₦8.03 billion to ₦5.05 billion.
NBPlc reported a 22.4% YoY plunge in core operating earnings to N10.9 billion in Q1’20, following significant increases in marketing & distribution expense (+13.5% YoY) and administrative spend (+16.1% YoY). We believe the high marketing expense reflects increasing promotional intensity in the breweries market.
The effective tax rate was also 3.5ppts higher YoY in the quarter
Notably, the company experienced significant expansions in changes in trade & other receivables and prepayment in the review period Pressure on net operating cash flow was further compounded by a 24.0% YoY increase in Value Added Tax (VAT) in the quarter.
NBPlc was able to keep revenue and cost of goods sold largely steady despite COVID-19 induced crisis in the latter part of the quarter. Specifically, Gross profit margin only contracted by 19bps YoY in Q1’20.
Source:
Brand spur
