May Not Pay Dividend for Second Year
October 27, (THEWILL) — Nigerian Breweries Plc has posted a profit after tax (PAT) of N85.5 billion for the nine months ended September 30, 2025, sharp rebound from a N149.5 billion loss recorded during the same period in 2024. However, the brewer’s unaudited financial statements reveal that its recovery remains fragile.
The firm is weighed down by soaring production costs, macroeconomic challenges and weak consumer spending which may lead to withholding dividend for another year.
The report paints a clear picture of resilience amid pressure. Operating expenses surged to N884.7 billion in the nine-month period, up from N681.8 billion a year earlier, an increase of nearly 30 percent. The spike was driven largely by higher raw material costs, energy expenses, and logistics disruptions that have intensified with insecurity across key supply routes and agricultural zones.
Cost Burden
Raw materials and consumables soared to N486.9 billion, compared to N407.2 billion last year a reflection of the persistent inflationary strain and Nigeria’s heavy reliance on imported raw materials. Advertising and sales expenses jumped to N89.7 billion from N54.1 billion, while distribution and maintenance costs also soared, highlighting the broader challenge of doing business in a high-cost environment.
Employee benefits rose to N64 billion, showing moderate wage adjustments amid inflation that has eroded household income and dampened consumption. The brewer also spent N47.7 billion on repairs and maintenance, a sharp rise from N29.1 billion in 2024 much of it linked to energy infrastructure and plant optimization.
The combination of these pressures kept margins tight even as net revenue rose to N1.05 trillion from N710.9 billion in the corresponding period last year, a 47 percent increase. Gross profit doubled to N415.1 billion from N209.9 billion, but gains were mostly offset by rising operating expenses and still-heavy finance costs, which stood at N39.1 billion despite declining from N72 billion last year.
Macroeconomic Pressures:
The brewing and beverage sector has been among the hardest hit by Nigeria’s cost realities. Insecurity across northern and central states continues to disrupt agricultural supply chains, raising the cost of sorghum, maize, and other key inputs. Energy prices remain elevated, with diesel and gas costs accounting for a growing share of manufacturing overhead.
In addition, currency volatility has worsened import expenses, especially for packaging materials and technical components sourced abroad. These combined pressures explain why, despite recovering from deep losses, Nigerian Breweries has yet to declare dividends, a decision that mirrors its cautious stance from 2024.
The absence of an interim dividend suggests a conservative outlook toward year-end. The company is likely focused on consolidating cash flow and offsetting accumulated debt, given that its finance obligations still exceed N39 billion this year.
Liquidity, Balance Sheet Strength
The company maintained a stable cash position, with N61.2 billion in net cash generated from operating activities, a turnaround from a negative N111 billion in 2024. Capital expenditure stood at N64.2 billion, reflecting ongoing investments in production capacity, plant upgrades, and sustainability initiatives.
Loans and borrowings reached N115 billion during the period, though this was offset by repayments totaling M162.6 billion a sign of fiscal prudence in an environment of high borrowing costs.
Consumer Reality, Price Sensitivity
While Nigerian Breweries has raised product prices to boost margins, the strategy did not come at no cost. The prices of key brands such as Star, Gulder, and Maltina have risen by over 40 percent since last year, pushing some consumers toward cheaper substitutes or smaller pack sizes. The brewer’s Q3 report hints that while revenue is climbing, volume growth has remained sluggish – a reflection of subdued consumer patronage and declining real incomes.
This mirrors a larger economic reality: high inflation rate, deepening poverty, and rising unemployment have compressed discretionary spending. For an industry built on a mass consumption regime, the challenges are obvious.
Cautious Year-End Optimism:
Nigerian Breweries’ results underscore the tension between resilience and survival in Nigeria’s manufacturing landscape. As the company braces for the final quarter, its focus appears to be on managing costs, stabilizing cash flows, and preserving shareholder value rather than chasing immediate payouts.
With insecurity still disrupting logistics and inflation expected to remain high, analysts anticipate that NB’s full-year dividend may again be deferred as management seeks to safeguard liquidity.
Yet, the company’s performance also reflects strategic discipline – growing revenue, cutting finance costs, and navigating macroeconomic shocks without external bailouts. Whether this cautious recovery translates into stronger 2026 performance will depend on Nigeria enjoying an economy operating on stable currency, lower energy costs, and rebound of consumer confidence.
Ogochukwu Onwaeze
