Q1 2016 Result: Nigeria Breweries Shades Competition With Strong Revenue

Q1 2016 Result

Nigeria Breweries, NB [NB:NL] (Heineken International BV) is clearing doubts that it cannot weather current economic slow down facing Nigeria. The company has released a strong Q1 2016 result.

The company group’s revenue was NGN 77.5 billion compared to NGN 69.9 billion in Q1 2015 which is a percentage growth of +10.87%. Because of the fact NB now controls over 6 different breweries, the group’s cost of sales has also gone up by +11%. This is NGN 36 billion in Q1 2015 compared to NGN 40 billion in Q1 2016.

In spite of  the fact that NB had cut marketing budget considerably since early 2015, its marketing and administrative costs still managed to increase by about NGN1 billion to arrive at NGN 13.9 billion in Q1 2016 compared with 12.6 billion in Q1 2015.

For NB competition, this aspect of the results does not lend itself to scrutiny. If NB has cut down on marketing budget in 2015, does it mean its distributive expenses make up the largest part of the total?

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Nicolaas Vervelde, CEO, Nigeria Breweries. Source: The Nation

NB has in recent times increased its product innovation and or brand extension efforts to react to Guinness Nigeria PLC’s [GUINNESS:NL] strong competition through new brands and extensions. In the last 15 months, NB with exception to other companies in its group had extended Star lager beer to Star Radler and Star Triplex. The company introduced Strongbrow (an apple cider) and relaunched its Ace roots to fight Guinness’ Orijin.

It is no doubt that NB is the market leader with its numerous breweries across the country. To fund its expansionary plans, NB raised a NGN 100 billion commercial paper late last year. The next quarter could be better for NB if the company maintains pressure across all the major regions where the group currently has breweries. However, Guinness is bent on fighting it out by extending Orijin, its top performing brand and Guinness Stout. The company is also well spread across key regions in the country.

 

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