International Breweries Plc has made a strong comeback in the first quarter of 2025, posting a pre-tax profit of N35.06 billion, a significant turnaround from the loss of N89.3 billion recorded in the same period last year.
The brewer’s return to profitability stems almost entirely from improved foreign exchange dynamics which drastically lowered the company’s non-operational costs, particularly its exposure to net foreign exchange losses. That adjustment alone cleared the path for the company to reflect its core operational strength on its bottom line.
In the three months ending March 31, 2025, International Breweries generated N173.6 billion in revenue, representing a 68.2% jump from the N103.2 billion earned during the same quarter in 2024. The revenue was primarily driven by pricing adjustments and increased market penetration across its beer and malt product lines. However, some believe this top-line growth must be viewed in context: it reflects the company’s response to inflationary pressure and rising input costs, not necessarily a sign of improved consumer purchasing power.
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The sharp rise in revenues was matched by a notable rise in the cost of sales, which jumped by 53.3% to N113.9 billion, from N74.3 billion the previous year. This indicates continued inflationary strain on raw materials, logistics, packaging, and energy — costs that continue to bite even as companies try to push some of the burden to consumers through price hikes.
Despite these headwinds, gross profit climbed by a substantial 106.7% to N59.6 billion, from N28.9 billion a year ago, reflecting stronger margins bolstered by more efficient cost recovery and operational scale.
Selling, administrative, and marketing expenses rose to N27.4 billion, up by 25.7% from N21.8 billion in Q1 2024. The increase underscores the company’s continued investments in branding, distribution, and logistics — critical for defending market share in Nigeria’s highly competitive beverage sector. But even with those increased costs, the company’s operations performed strongly.
The real game-changer was the dramatic reduction in non-operating expenses, particularly the foreign exchange losses that had devastated the firm’s bottom line in 2024. In Q1 2024, International Breweries recorded N80.5 billion in net foreign exchange losses, a figure that completely wiped out operating gains. In contrast, the company reported only N581.4 million in such losses in Q1 2025, marking a staggering 99.3% reduction.
This steep decline can be attributed to a relatively more stable exchange rate regime in early 2025, improved access to forex liquidity, and possibly more sophisticated hedging strategies employed by the company’s treasury team. The naira, while still under pressure, has seen less volatility compared to the dramatic devaluation episodes of 2023 and 2024, offering businesses some relief in managing dollar-denominated obligations.
Swing to Profit and Asset Position
Thanks to the forex reprieve, operating profit rebounded to N31.5 billion, reversing a deep operating loss of N80.5 billion recorded in the corresponding period last year. Pre-tax profit followed suit, swinging to N35.06 billion, an impressive recovery that underscores how critical currency stability is to the manufacturing and fast-moving consumer goods (FMCG) sectors.
As of March 31, 2025, total assets stood at N742.9 billion, up slightly from N728 billion in Q1 2024, reflecting a 2.07% increase. The modest rise in assets shows the company is growing cautiously, likely prioritizing efficiency and liquidity over-aggressive expansion in a still-uncertain economic climate.
Stock Market Reaction and Investor Sentiment
Investors have responded favorably to the company’s turnaround. As of April 28, 2025, International Breweries’ shares closed at N8.47, representing a year-to-date increase of 152.6%. This performance not only signals renewed investor confidence in the brewer’s financial trajectory but also highlights the stock’s strong rebound potential following its depressed position in 2024.
Analysts believe the company’s recovery would not have been possible without the easing of forex constraints that crippled its performance last year. Nigeria’s volatile currency environment has rendered many businesses in the manufacturing sector unprofitable, especially those with dollar obligations and import-heavy operations. The Q1 2025 result now suggests that as exchange rate pressures ease, even slightly, businesses can breathe again.
No Illusion of Rising Disposable Income
While some companies’ Q1 profits have been attributed to an improved economic environment, analysts note that this profit recovery should not be misread as evidence that Nigerian consumers are spending more freely. Disposable incomes remain severely strained due to persistent inflation, job losses, and higher living costs, all of which continue to weigh heavily on demand. Many consumers have traded down to cheaper beverage options or reduced consumption altogether. The sharp rise in International Breweries’ revenue likely reflects price increases and not actual volume-led growth.
The company, like others in the beverage industry, is walking a tightrope — trying to balance profitability with affordability in a market where price elasticity is very sensitive.