Nigeria Breweries makers of Heineken Beer, Star Lagger and Maltina reported it paid off about N27.7 billion of its loans in the first half of 2021. This is according to information contained in its interim results for the first half of the year.
The nations largest brewer started the year with a total debt profile of about N91.5 billion up from N55.7 billion a year earlier. The company tapped loans from the FMDQ via commercial papers sold to investors leveraging on cheap borrowing costs in the pandemic year.
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In 2020, the FMDQ exchange, the leading organiser for the Nigerian debt capital market, disclosed that Nigerian Breweries issued 4 series (Series 8, 9, 10 and 11) of commercial papers in that year which have all matured. The highest tenure of the commercial paper was the series 8, which lasted for 268 days with a yield at issue of 7%.
All the proceeds from the commercial paper issued in 2020, according to the pricing supplement document, were used to “support short-term funding requirements.”
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Update on Nigerian Breweries Loan Repayment
In 2021, the company issued 3 more commercial papers (series 12, 13 and 14). These commercial papers were issued in the first quarter of the year and according to their pricing supplement document, they were also used to support short term funding requirements. Even with more issued commercial papers, comparing the company’s loan performance against 2020, the company reduced its total loans and borrowings by 30.3%, from ₦91.5 billion in 2020 to ₦63.8 billion as of the first half of the year. This is attributable to the company paying off some loans in both its long- and short-term accounts. The company paid off 14.5% of its long-term loans and borrowings from ₦39.6 billion in 2020 to currently stand at ₦33.9 billion while from its short-term loans, the company paid off 42.37% from over ₦50 billion to currently stand at ₦29.9 billion.
What they are saying
The official statement of the company’s half-year results indicated that the company recorded a strong balance sheet despite the impact of COVID-19 on its businesses. Commenting on the results, the Board stated, “The impact of Coronavirus (Covid-19) pandemic on the economy and by implication, the Company, continued during the period under review. Our priority remained protecting the health, safety and welfare of employees, customers, and partners. We regularly monitored and evaluated the Company’s financial position and performance in the light of the pandemic; our Balance Sheet remained strong. The focus of the Board and Management continues to be the mitigation of the impact of the pandemic on the business.”
Beyond the impact of the COVID-19 pandemic, the statement further disclosed that the huge impact of excise duty increase, as well as an all-time high inflation figure recorded by the Nigerian economy, are also factors that affected the company’s profitability. It said, “The operating environment remains challenging with the imposition of tariff and increase in Value Added Tax from 5% to 7.5% which put huge pressure on revenue and profitability of the business.”
What you should know
Nigerian Breweries (NB) was able to increase its revenue by 37.8% as it declared the sum of ₦209.2 billion in the first half of the 2021 financial year, compared to the ₦151.8 billion made in the first half of 2020.
The company recorded a Profit After Tax (PAT) of ₦7.7 billion during the period, a 38% increase compared to the ₦5.6 billion generated in the same period in 2020. Nigerian Breweries is the largest in its sector, with a market capitalization of ₦384 billion at a current price of ₦48. According to Bloomberg, the company’s P/E ratio stands at 41.92, Earnings Per Share at 1.19 and dividend yield at 1.88%. Its share price is currently down by 14.28% Year-to-Date (YtD), as it started the year trading ₦56, to currently stand at ₦48 as of the time of writing this report.
The company has paid its proposed dividend of ₦0.69 per share this year which represents a 54.31% decline from its 2020 final dividend of ₦1.51. Nigerian Breweries is the 51st most traded stock on the Nigerian Stock Exchange over the past three months. It has traded a total volume of 47.4 million shares in 3,085 deals, valued at ₦2.67 billion over the period, with an average of 752,104 traded shares per session.