International Breweries’ Profit After Tax Falls 5.74% As Tax Bill Jumps 119%

International Breweries Plc recorded a 21.86 per cent increase in profit before tax to N90.44 billion in the nine months ended September 2026, but a sharp rise in income tax expenses pushed its profit after tax down by 5.74 per cent.

The company disclosed this in its unaudited nine-month financial results filed with the Nigerian Exchange (NGX) on Monday, October 26, 2026.

According to the report, profit after tax declined to N54.51 billion from the corresponding period of 2025, despite improvements in gross profit, operating earnings and cash generation.

Revenue rose marginally by 2.12 per cent to N482.61 billion from N472.57 billion recorded in the same period last year, indicating relatively modest growth in sales.

Earnings per share also fell to 32 kobo from 34 kobo, reflecting the impact of the higher tax burden on returns to shareholders.

Cost Reduction Boosts Profitability

International Breweries improved its gross profitability during the review period, supported by a significant reduction in production costs.

Cost of sales declined by 8.02 per cent to N286.67 billion, lifting gross profit by 21.76 per cent to N195.94 billion.

The company’s gross profit margin also improved to 40.61 per cent from 34.05 per cent recorded in the corresponding period of 2025.

Materials consumed and allocated overheads fell by 14.35 per cent to N222.83 billion, contributing to the reduction in production expenses.

The brewer also recorded a reduction in realised foreign exchange losses, which declined by approximately 36 per cent to N8.63 billion.

These improvements supported a 20.66 per cent increase in operating profit to N80.86 billion.

However, administrative, marketing and distribution expenses rose by 26.13 per cent to N116.16 billion, while advertising, promotion and distribution costs increased by 36.68 per cent.

Despite the higher operating expenses, the reduction in production costs helped strengthen the company’s overall operating performance.

Tax Expenses Surge To N35.93bn

The increase in profit before tax was also supported by stronger net finance income, which rose by approximately 33 per cent to N9.58 billion.

Finance income stood at N19.63 billion, exceeding finance costs of N10.05 billion during the nine-month period.

However, income tax expenses surged by 119.25 per cent to N35.93 billion from N16.39 billion in the corresponding period of 2025.

The increase in taxation significantly eroded the gains from improved operating profitability, resulting in lower profit after tax despite the growth in pre-tax earnings.

The development follows a similar trend in the first half of 2026, when the company’s profit before tax increased by 21.55 per cent, while profit after tax declined by 7.21 per cent.

A comparison of the half-year and nine-month results indicates that third-quarter profit before tax stood at approximately N15.65 billion, compared with N12.71 billion in the corresponding quarter of 2025.

Meanwhile, cash generated from operations increased to N121.10 billion from N38.42 billion, while net operating cash flow reached N114.43 billion.

Capital expenditure stood at N85.13 billion, broadly in line with the previous year.

The company also reported no outstanding bank loans or overdrafts as of September 30, 2026.

N84bn Capital Return Weighs On Cash Position

Despite stronger operating cash generation, International Breweries’ cash and cash equivalents declined by 33.27 per cent to N103.74 billion as of September 2026 from N155.45 billion at the end of December 2025.

The decline followed significant financing outflows, including an N84 billion return of capital to shareholders.

Net financing cash outflows reached N99.71 billion during the period, with the capital return accounting for most of the amount.

The qualification date for the capital return was September 16, 2026, while payment was scheduled for September 23.

The capital distribution also contributed to a 5.90 per cent decline in total shareholders’ equity to N470.33 billion.

At the end of the first half of 2026, the company held N171.08 billion in cash and cash equivalents, including N115.80 billion in short-term investments.

The subsequent reduction in cash therefore reflects, in part, the substantial payout to shareholders from its earlier cash position.

The company’s ownership disclosures also showed AB InBev Nigeria Holdings BV’s reported stake increasing to 96.01 per cent from 78.44 per cent, while Brauhaase International Management GmbH’s stake declined to 1.41 per cent from 8.85 per cent.

With their reported share counts unchanged and combined substantial holdings remaining at 97.42 per cent, the changes appear to reflect a reclassification rather than additional share purchases.

Accumulated Losses Limit Dividend Prospects

Despite its improved operating performance, International Breweries continues to face challenges in translating higher pre-tax earnings into stronger shareholder returns.

Accumulated losses from previous years remain a constraint on its ability to resume ordinary dividend payments.

The company had accumulated losses of N191.03 billion at the end of 2025 and proposed a share capital reduction to restore distributable reserves.

Progress on the proposed restructuring is expected to remain important to the company’s prospects of resuming ordinary dividend distributions.

Meanwhile, the company’s shares declined by approximately 2.76 per cent to N8.80 on Monday, October 26, from N9.05 on Friday, October 23, following the release of its results.

The stock has lost approximately 37.14 per cent of its value since the beginning of 2026, falling from N14 to N8.80 per share.

It has also declined by approximately nine per cent since September 24, reflecting continued weakness in its market performance.

For investors, the results present a mixed picture: stronger operating margins, improved cash generation and the absence of bank debt on one hand, and modest revenue growth, rising selling expenses and a significantly higher tax burden on the other.

The company’s fourth-quarter tax expenses and progress on its proposed capital reduction will be key factors to watch as investors assess whether its improved pre-tax profitability can translate into stronger after-tax earnings and better shareholder returns.