Nigerian Breweries’ Earnings Squeezed by New Tax Rates as Bill Jumps 45%

The brewer recorded an 18% increase in profit before tax, but a steep rise in income-tax expense restricted net-profit growth to 5% in the first half of 2026.

Nigerian Breweries Plc’s income-tax expense surged by 45% to N63.37 billion in the first half of 2026, limiting growth in its net profit despite stronger revenue, lower financing costs and an 18% rise in profit before tax.

The brewer reported a profit after tax of N92.96 billion for the six months ended June 30, 2026, up 5% from N88.42 billion in the corresponding period of 2025, according to its earnings release on Friday.

The modest bottom-line increase contrasted with profit before tax, which climbed to N156.33 billion from  N132.25 billion. Nigerian Breweries attributed the gap to the impact of new tax rates.

Income-tax expense rose by N19.55 billion from the  N43.83 billion recorded a year earlier. Based on the reported figures, the tax charge was equivalent to about 40.5% of pre-tax profit, compared with approximately 33.1% in the first half of 2025.

Group revenue increased by 9% to N803.68 billion from N738.14 billion, supported by revenue-management measures, investment in strategic brands and continued contributions from premium products and the malt category.

Gross profit advanced by 14% to N354.86 billion, while the gross-profit margin expanded by two percentage points. Results from operating activities rose by 8% to N163.97 billion.

However, selling, distribution and administrative expenses increased by 20% to N192.99 billion, reflecting persistent cost pressure in a volatile operating environment.

A sharp reduction in financing costs provided a major boost to earnings. Net finance expense fell by 61% to N7.65 billion from N19.65 billion, helping pre-tax profit grow considerably faster than operating profit.

Basic and fully diluted earnings per share increased by 5% to 300 kobo from 285 kobo in the comparable period.

Nigerian Breweries said its balance sheet had strengthened, with improved liquidity and borrowing maintained at zero. The company also restored retained earnings to a positive position, giving it greater flexibility to manage changing market conditions and fund business priorities.

Looking ahead, the brewer said it would focus on revenue optimisation, cost efficiency, disciplined execution and strong cash generation while monitoring key exposures and taking steps to preserve financial flexibility.