Champion Breweries Plc has reported an impressive 186.08% increase in pre-tax profit, reaching N1.2 billion in its financial results for the year ending December 31, 2024. This is a substantial leap from the N445.3 million recorded in the previous fiscal year, underscoring the brewery’s strong performance amid a broader recovery trend within Nigeria’s brewing industry.
The company’s total revenue also climbed significantly by 64.44%, reaching N20.8 billion from N12.7 billion in 2023. This growth was primarily driven by the robust sales of Champion Beer and Champ Malta, highlighting the brewery’s effective market strategies and expanding consumer base.
Financial Highlights
- Revenue: N20.8 billion (+64.44% YoY)
- Cost of Sales: N12.1 billion (+59.44% YoY)
- Gross Profit: N8.7 billion (+71.96% YoY)
- Other Income: N68.8 million (-42.76% YoY)
- Operating Profit: N2.3 billion (+289.45% YoY)
- Finance Income: N15.5 million (+38.09% YoY)
- Finance Cost: N1 billion (+529.47% YoY)
- Pre-Tax Profit: N1.2 billion (+186.08% YoY)
- Post-Tax Profit: N816.9 million (+120.47% YoY)
- Total Assets: N21.3 billion (+3.85% YoY)
- Retained Earnings: N3.8 billion (+26.81% YoY)
Breweries Are Bouncing Back
Champion Breweries’ stellar performance comes amid a wave of strong financial results from breweries across Nigeria. Analysts believe this uptick in profitability is a clear indication that the brewing industry may have passed the worst of the economic downturn triggered by Nigeria’s foreign exchange (FX) market liberalization.
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In June 2023, the Central Bank of Nigeria (CBN) floated the naira, leading to a sharp devaluation of the currency and causing significant disruptions across various sectors. Breweries were not spared, as the cost of importing raw materials and equipment soared, squeezing margins and threatening profitability.
However, the brewing industry has shown remarkable resilience. For instance, Guinness Nigeria Plc reported a surge in sales driven by a strategic shift towards affordable product offerings and increased demand for spirits and non-alcoholic beverages. The company’s ability to navigate the FX volatility by leveraging local sourcing and cost management strategies contributed to its improved performance, which analysts see as a sign of broader industry recovery.
Revenue Growth and Cost Management
Champion Breweries’ 64.44% increase in revenue to N20.8 billion highlights the company’s strong market positioning. The growth was driven entirely by sales of its flagship brands, Champion Beer and Champ Malta, which continue to enjoy strong consumer patronage.
However, the company also faced rising costs, with the cost of sales increasing by 59.44% to N12.1 billion from N7.6 billion in 2023. This was largely due to higher costs of raw materials and logistics, compounded by naira depreciation. Despite these pressures, Champion Breweries managed to grow its gross profit by 71.96%, demonstrating effective cost management and operational efficiency.
Operating Profit and Finance Costs
Operating profit surged by 289.45% year-on-year, reaching N2.3 billion from N603.9 million. This remarkable growth is indicative of the company’s operational strength, particularly in navigating the economic challenges posed by the FX reforms.
Finance income rose by 38.09% to N15.5 million, driven by interest on call deposits. However, finance costs escalated sharply by 529.47% to N1 billion, which may signal increased borrowing or higher interest expenses. This surge in finance costs, while concerning, appears to be part of a broader industry trend where companies are incurring higher expenses to maintain liquidity and finance growth initiatives.
Asset Position and Financial Health
Champion Breweries’ total assets grew modestly to N21.3 billion, a 3.85% increase from N20.5 billion in 2023. Non-current assets, which include property, plant, and equipment valued at N13.8 billion, represent a significant portion of the company’s asset base.
Current assets were reported at N7.3 billion, with cash and cash equivalents, along with inventories, making up a substantial share. Retained earnings also increased by 26.81% to N3.8 billion, bolstering the company’s financial stability and potential for future investments.
Indications of Recovery
The brewing sector’s positive performance suggests a potential easing of the financial strain caused by the FX market liberalization. Many breweries have adapted by restructuring operations, enhancing local sourcing, and adjusting pricing strategies to mitigate the impact of the naira devaluation.
The broader recovery in the brewing industry is expected to lead to increased competition as companies jostle to capture market share. Analysts expect Champion Breweries to leverage its brand strength and operational efficiency to sustain its growth trajectory.