International Breweries Plc. (INTBREW) managed to sustain its upward revenue trajectory, after a shaky start to the 2020 financial year. The brewer reported a 3.35% YoY growth in revenue to NGN136.79bn, overcoming a challenging first half (during which revenue was down 11.68% YoY due to social restrictions and absence of on-trade sales). A gradual reopening of on-trade channels and festivity driven demand fueled the rebound in third and fourth quarter sales (up 22.79% and 16.90%YoY respectively), resulting in cumulative year on year growth. For 2021FY, our expectation for revenue growth is anchored on a more robust recovery of on-trade sales (which is responsible for almost 70% of total industry sales) as vaccination efforts in the country gather momentum. This should support alcohol volumes over 2021FY, which we forecast would come in higher, due mainly to a lower base from last year. On product pricing, although there has been no clear guidance from Management, we expect that the brewer would be less willing to increase prices (relative to its main competitors) in view of its price discount strategy. We however do not rule out several marginal increases over the course of the year to cope with inflationary pressure and support margins. After considering all the above, we project a 7.44% YoY increase in revenue to NGN146.96bn (vs. 2020FY: NGN136.79bn).
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Earnings Update – INTBREW 2020FY
