INTERNATIONAL BREWERIES: BREWING LESS PROFIT.

International Breweries PLC is brewing less profit this financial year, according to figures for the half year to September released not too long ago.
From the figures International Breweries (IB) ended the half year with only N9.64 gain on each brew it sold for N100 on the average as against N19.8 by the same time in the previous year.
This figure is based on total income of the company by the half year mark. Revenue from main line business of brewing had increased only by a very marginal 0.71% from N10069m to N10140m but finance and other income pushed  overall income growth to 3% at N10374.5m
Then of course, the gain curve went down because all the expenses outgrew the very marginal increase  in income. Direct cost rose by 4.57% to N5051.7m from N4831m while all overheads increased by 16.7% to N3283.7m from N2814.7m
Then as if to drive the nail harder, finance costs more than doubled  to N790.8m from N308.9m and losses recorded from other non-core sources rose by 104.7% to N248.1m from N121.2m previously.
The leap in interest paid aka finance cost arose from recourse to short term borrowing to pay off due longer term money. Current borrowings thus jumped to N5654.4m from N470m while non- current borrowings decreased by 30% to N4828.4m from N6963.2m.
The liquidity pressure was very intense for IB because from a positive working capital of N1263.2m it ended the half year with N3578.6m deficit.
In the end, profit before tax dropped by 50% to N1000.2m from N1999m.
SO:
* To end the current financial year to March 2016 with double digit profit margin will be quite a task for International Breweries.
* However, some relief could come from recent drop in benchmark interest rates

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