Nigerian Breweries’ growth outlook dims as competition erodes volumes

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Read History Go to My Account Log Out Enhanced by Google Companies Nigerian Breweries’ growth outlook dims as competition erodes volumes Nigerian Breweries Plc faces a slower growth trajectory as rising product prices and intensifying competition weigh on sales volumes, prompting

Listen to this article Share Nigerian Breweries Plc faces a slower growth trajectory as rising product prices and intensifying competition weigh on sales volumes, prompting CardinalStone Research to lower its revenue forecasts and valuation for the brewer.

In its latest company update, CardinalStone cut its 12-month target price for the company to N82.19 per share from N91.80, reflecting a more cautious outlook for volume growth and the prospect of increasing competition in the beer market.

The investment firm said Nigerian Breweries recorded volume contraction in the first nine months of 2026, despite implementing price increases averaging 8.6 percent year-on-year. The additional price adjustment in May further pressured demand, leading CardinalStone to forecast a volume decline for the full year.

Consequently, the research firm reduced its FY2026 revenue growth forecast to 8.1 percent from 20.8 percent, translating to projected revenue of N1.6 trillion against its previous estimate of N1.8 trillion.

“Competition to remain aggressive over our forecast horizon,” CardinalStone said, pointing to a major competitor’s market share gains for two consecutive quarters.

The competitive pressure was reflected in the companies’ revenue performance. The competitor recorded revenue growth of 19.9 percent in the second quarter against Nigerian Breweries’ 10.2 percent, while in the third quarter, it grew revenue by 41 percent as Nigerian Breweries recorded a 3 percent decline.

“Over the next five years, we expect competition to intensify, as its competitors have announced capex plans that should lead to a sharper contest for market share,” said CardinalStone.

CardinalStone now expects Nigerian Breweries’ revenue to grow at a five-year compound annual growth rate of 11.9 percent, down from its previous projection of 21.1 percent. Its volume growth forecast was also cut to 7.6 percent from 17.8 percent.

However, improving foreign exchange conditions and lower input costs have provided some relief to the brewer’s margins. CardinalStone noted that sorghum prices declined 12.2 percent year-on-year in the first half of 2026, while the naira appreciated 11.8 percent over the same period.

The firm consequently raised its FY2026 gross margin forecast to 42.8 percent from 39.5 percent, although it cautioned that rising raw material and energy costs could partly offset the improvement.

Nigerian Breweries’ balance sheet has also strengthened following the full repayment of its interest-bearing debt in the first half of 2026.

The company ended September with N77.3 billion in cash, while finance costs declined 45.1 percent quarter-on-quarter in the third quarter.

CardinalStone expects the improved financial position to support dividend resumption, projecting earnings per share of N5.11 and dividends of N4.09 per share for 2026.

Despite the weaker growth outlook, the research firm maintained its BUY recommendation, implying a potential 17.4 percent upside from its N70 reference price.