International Breweries Plc. blames weak industry conditions and supply chain problems for the fall in volumes in Q3 2022

The third quarter results for International Breweries Plc have been released, and they indicate a record 5.6% increase in revenue from the third quarter of 2021 to a record N49 billion.

However, higher sales charges and other costs resulted in a loss for the period of N3.1 billion, as opposed to N2.2 billion a year ago. After a great first half of the year, volume momentum significantly dropped.

According to International Breweries' unaudited financial statement for the three months ended September 30th, the company's cost of sales increased during that time due to growing inflation.

The cost of sales during the time was N38 billion, up 17% from N33 billion during the same period.

The cost of sales for the quarter increased by 17% to N38 billion from N33 billion during the same period in 2021, while the gross profit decreased by 10% to N10 billion from N13 billion. Similar to other expenses, which increased dramatically from N131 million in Q3 of last year to N1.3 billion.

However, the corporation said in a statement that weak industry conditions and continuous supply chain problems were to blame for a fall in volumes in the third quarter of 2022.

The company's managing director, Hugo Rocha, ascribed the change to persistent supply chain problems as well as the effect of inflation over the previous three months on consumers' disposable money.

“The last three months have been characterized by elevated inflationary pressure, which has had an impact on consumers’ disposable income. The period experienced especially severe weather with a longer rainy season and floods in key markets. However, despite the difficult quarter, we remain focused on our winning commercial strategy,” Rocha said. “Year-to-date, our brands remain resilient and continue to deliver volume growth.  We remain committed to returning to profitability and creating value for our stakeholders.”

‘How has the company performed in the last 4 years?’

International Breweries Plc (IBPLC) is a subsidiary of Anheuser-Busch InBev (ABInBev), the largest brewer in the world with more than 400 beer brands and more than 50 years of experience.

The company has, however, had trouble increasing its bottom line over the past four years. Between 2018 and 2021, a four-year periodic analysis revealed a sustainable growth trajectory with continuous revenue growth year over year.

Operational costs brought on by currency fluctuations, devaluation, excessive financial debt, COVID-19 disruption in 2020, and other variables are one of the main causes of losses. The company's retained earnings were destroyed by the losses and net profit margins, resulting in an overall loss of N35.958 billion in the first quarter of 2022.

Its retained earnings were destroyed by losses and net profit margins, resulting in an accumulated loss of N35.958 billion in the first quarter of 2022. This is a slight decrease from the accumulated loss of N36.679 billion in the first quarter of 2021 due to the profit realized in 2022.

Cost of sales increased by 26.81% in 2019 from N84.494 billion to N107.144 billion. Operating costs increased by 32% to N53.6 billion in 2021 from N40.57 billion in 2020, which can be attributed to a 29% increase in administrative costs.