Amaechi Raphael Chinedu
@Official_ARC·1h
Nigerian Breweries' sales rose 5%. Its profit rose 33%. Here's the gap
Where we start: on Thursday the All-Share Index rose 0.47% to a record 254,083.02, and the market's total value hit an all-time high of ₦164.97trn. The index is up 63.28% this year, and today is the last trading day of October.
The puzzle this morning is 
$NB. Nigerian Breweries' revenue grew only 5.4% to ₦1.10trn in the first nine months, yet profit after tax jumped 33.4% to ₦114.1bn. How does a small rise in sales become a big rise in profit?
• Its cost of sales actually fell slightly, so gross margin widened to about 43.3% from 39.7%
• Finance costs, the interest it pays on borrowing, fell 61% to ₦11.20bn
• Net finance costs dropped to ₦7.50bn from ₦33.66bn a year earlier
The lesson: profit can grow much faster than sales when costs and debt shrink. The open question is how much of that can repeat once the debt savings are already in the numbers.
Three things worth watching today:
1. How the market prices $NB's results. Selling and distribution costs still rose 24.3%, so investors may weigh the margin gains against the spending.
2. Can 
$DANGCEM hold its new 52-week high? It jumped 5.82% to ₦1,420 yesterday and single-handedly lifted the Industrial Index 3.41%.
3. Where idle cash goes. At Wednesday's Treasury bill auction the government took only ₦71.16bn of ₦1.91trn in bids, and the one-year rate eased to 15.80%. When that much money is turned away from T-bills, some of it looks for other homes, and stocks are one of them.
Want to see how today's moves hit your own holdings? Add your portfolio on Gopexly and follow along.
Not financial advice, just what's on the radar.
$NB. Nigerian Breweries' revenue grew only 5.4% to ₦1.10trn in the first nine months, yet profit after tax jumped 33.4% to ₦114.1bn. How does a small rise in sales become a big rise in profit?
• Its cost of sales actually fell slightly, so gross margin widened to about 43.3% from 39.7%
• Finance costs, the interest it pays on borrowing, fell 61% to ₦11.20bn
• Net finance costs dropped to ₦7.50bn from ₦33.66bn a year earlier
The lesson: profit can grow much faster than sales when costs and debt shrink. The open question is how much of that can repeat once the debt savings are already in the numbers.
Three things worth watching today:
1. How the market prices $NB's results. Selling and distribution costs still rose 24.3%, so investors may weigh the margin gains against the spending.
2. Can $DANGCEM hold its new 52-week high? It jumped 5.82% to ₦1,420 yesterday and single-handedly lifted the Industrial Index 3.41%.
3. Where idle cash goes. At Wednesday's Treasury bill auction the government took only ₦71.16bn of ₦1.91trn in bids, and the one-year rate eased to 15.80%. When that much money is turned away from T-bills, some of it looks for other homes, and stocks are one of them.
Want to see how today's moves hit your own holdings? Add your portfolio on Gopexly and follow along.
Not financial advice, just what's on the radar.0 views
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