NIGERIA | BREWERS | INTBREW PLC

Quick take: Significant FX loss wipes out Q1 earnings.

International Breweries' Q1 2024 unaudited numbers showed Revenue growth of 89.7% y/y to N103.22bn from N54.39bn (Q1 2023). On a q/q basis, Revenue was up 34.4% from N76.82bn in Q4 2023. We believe the topline growth was mainly driven by the c.23.5% price increase across product segments of the business in the quarter. The Cost of Sales (ex-depreciation) grew faster than Revenue, up 114.8% y/y to N66.79bn (Q1 2024) from N31.09bn (Q1 2023). Consequently, Gross Margin declined to 35.3% from 42.8% (Q1 2023). Although, Gross Profit was up 56.3% y/y to N36.43bn from N23.31bn in Q1 2023.

Operating Expense (ex-depreciation) which includes Admin, Marketing and Promotion Expense was up 27.1% y/y, reaching N18.64bn from N14.78bn (Q1 2023). IntBrew recorded Other Income (from Scrap sales, sundry & royalty) of N4.8bn from N100m in Q1 2023 and despite a rise in Depreciation & Amortisation by 20.8% y/y to N10.79bn (Q1 2024) from N8.93bn (9M 2022), the company recorded an Operating Profit of N11.86bn (Q1 2024) compared with N308m Operating Loss in Q1 2023.

In Q1 2024, the company's Finance Income declined by 75% to N860m from N3.43bn (Q1 2023) as its Cash and Cash Equivalents balance also dipped by 69.3% to N37.87bn as of Q1 2024 from N123.49bn in FY 2023. On the flip side however, the company's Finance Cost grew by 110.5% to N9.64bn from N4.58bn (Q1 2023) driven by the growth in borrowings balance which was up 26.59% to N473.9bn (Q1 2024) from N374.3bn (FY 2023). The business recorded a significant FX loss of N92.44bn in the quarter of which 26% (N23.92bn) was realised and 74% (68.52bn) is yet to be realised.

In summary, the company reported Loss of N60.39bn compared with a loss of N2.31bn in Q1 2023, making it the sixth consecutive loss-making quarter.

We have a sell recommendation with a price target of N4.2/s. Current price is N4.65/s.

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Kindly click on the below link to download the full report.

"‹"‹"‹CSL-International-Brewery-Q1-2024-Quick-Take.pdf"‹

"‹"‹"‹"‹"‹"‹"‹"‹"‹Kind Regards.

Analyst: Goke Adetoyinbo

Email: CSLResearch@fcmb.com"‹

Address: 44 MARINA, LAGOS ISLAND, "‹

Website: www.cslstockbrokers.com