Nigerian Breweries N99bn Profit Rekindles Dividend Hopes

Despite a N99 billion profit in 2025, Nigerian Breweries Plc will not pay dividends to shareholders for the third consecutive year, though this profit reduces the time needed to resume payouts.

The entire year’s profit quickly disappeared into the accumulated loss hole, which stood at N170 billion at the close of 2024. But with that comes the hope of eventually levelling up this year and rebuilding retained earnings, which towered at over N90 billion in 2022 before melting and sinking.

The company needs to eliminate its over N72 billion retained deficit before resuming dividend payments, with prospects looking positive for achieving this by mid-2026.

The optimism pivots on strong sales and slowing costs, which delivered the best margins the company has seen in recent years at the end of 2025.

Nigerian Breweries’ 2025 financial report indicates an improved operating model, demonstrating greater efficiency in converting assets to revenue and revenue to profit.

Asset turnover improved from 1.0 to 1.4, indicating that each naira of assets generated N1.40 in sales. This significant operating advantage reflects a new strength in sales revenue delivery compared to previous years.

The company’s management said innovative approaches through an improved but volatile operating environment, premium branding, pricing advantage and strong commercial execution.  drove the strong gains in sales.

It is a double advantage for the company when revenue flows into profit, which has turned around the three years of losses. Net profit margin advanced from negative to 6.8 per cent over the preceding financial year, setting the company on the path to rebuilding returns to shareholders.

Structural changes that expanded the room for profit delivery include the gains in revenue, rigorous cost discipline, productivity gains and supply chain efficiencies, according to the company’s management.

A major cost-saving line for the brewery in the year is the net finance expenses, which were slashed by 82.5 per cent to N44 billion. The management expects finance expenses to be kept down following the steps taken to deleverage the balance sheet and eliminate foreign-currency exposure windows.

The company injected new money into its operations in 2024 through a rights issue, which has enabled the slashing of balance sheet borrowings from over N209 billion at the end of 2024 to less than N60 billion by the end of 2025. This includes the payoff of foreign-denominated borrowings that created net foreign exchange losses of close to N158 billion in 2024.

The company has begun to reap the rewards of balance sheet deleveraging: net foreign exchange losses turned into net gains of over N752 million in 2025, and interest expenses on borrowings fell from N98 billion to under N45 billion over the period.

The aggressive corporate financial strategy appears to turn the heat on trade creditors – the interest-free credit providers that staked as much as over N390 billion on company payables in 2025. This is nevertheless a drop from N435.6 billion in the previous year.

The company also made big cost savings from an unexpected line: production cost, which is in defiance of the industry trend. Cost of production grew by 18 per cent to N902 billion in the year, about one half of the over 35 per cent increase in turnover.

With the slowdown in production costs, gross profit was elevated at 76.7 per cent to N565 billion, meaning that the contribution of the naira of sales to gross profit rose from 29.5 kobo to 38.5 kobo over the review period.

However, the company’s cost discipline failed to tame selling and distribution expenses, which grew ahead of sales revenue at over 37 per cent to N279 billion. This means the company devoted nearly one-half of gross profit to selling and distribution cost and the selling/distribution expense per naira of sales increased by 19 kobo in the year.

The company states that while profit delivery for the year isn’t enough to turn around its negative retained earnings position, the directors are pleased that the turnaround journey is proceeding in line with expectations.

It can be expected that the turnaround momentum could speed up with the company’s full acquisition and integration of Distell Wines and Spirits Nigeria Limited, which was completed in 2025. With the acquisition, Nigerian Breweries now extends its operations beyond the beer portfolio.

The company closed the 2025 operations with earnings per share of N3.19, rising from a loss per share of N12.07 in 2024.