Amaechi Raphael Chinedu

@Official_ARC·2h

Profit up 22% and down 6% at the same time? Meet the effective tax rate

International Breweries' nine-month results look like a contradiction. Pre-tax profit rose 21.86% to ₦90.44bn. After-tax profit fell 5.74% to ₦54.51bn. Both are true, and the gap has a name: the effective tax rate. How it works: 1. Effective tax rate = tax expense ÷ profit before tax. It tells you what share of pre-tax profit went to tax. 2. For $INTBREW this year: ₦35.93bn ÷ ₦90.44bn ≈ 39.7%. 3. A year ago: ₦16.39bn ÷ ₦74.22bn ≈ 22.1%. So the business kept more of every naira it earned before tax last year. This year the tax bill jumped 119%, and that swallowed the whole improvement and then some. Earnings per share slipped to 32 kobo from 34 kobo. Why look at both lines: pre-tax profit tells you more about how the business itself is running. Here, gross margin improved to 40.61% from 34.05% as cost of sales fell. After-tax profit is what's actually left for shareholders. When the two move in opposite directions, the tax line is usually the first place to look. Next time you see a results headline on the NGX, check which profit it's quoting. Which do you watch first in results, pre-tax or after-tax profit? Tell us below 👇 Not financial advice.