Nigerian Breweries (NB) has published its fourth quarter (Q4) 2013 results which showed that profit after tax (PAT) grew by 27 per cent as against last year to N16.3 billion.
Although Q4 2013 sales grew 9 per cent, a gross margin expansion of 407bps to 56 per cent and a 38 per centreduction in net interest income resulted in profit before tax (PBT) growing by 29 per cent to N23.7 billion.
The strong sequential growth in sales and PBT reflect seasonality effects due to strong beer demand which can be traced to year-end holiday celebrations..
The management of Heineken (NB’s parent) stated on its Q4 2013 conference call that unit volumes in its Nigerian business are still being impacted by inflationary pressures on household disposable incomes; volumes in Nigeria grew by low single digits. This implies that the 9 per cent growth in Q4 2013 sales is reflective of average price increases of less than 5 per cent on some brands.
Going by Heineken management comments, although the Heineken brand grew on the back of targeted advertising spend, the major drivers of growth were the lower-end lager and malt segments.
Given that the lower-end of the beer market is growing faster than the mainstream due to consumers down-trading to lower priced alternatives.