The beers are back; International Breweries’ nine-month pre-tax profit rises 22% to N90.44bn

International Breweries Plc increased its profit before tax by 21.86 per cent to N90.44 billion in the nine months ended September 30, 2026, as lower production costs boosted profitability despite modest revenue growth and a sharp rise in income tax expenses.

The brewer’s unaudited financial statements showed that revenue increased by 2.12 per cent to N482.61 billion from N472.57 billion in the corresponding period of 2025. The result highlights a financial performance driven more by improved cost efficiency than by a significant expansion in sales.

Although the company generated higher earnings before tax, its profit after tax declined by 5.74 per cent to N54.51 billion from N57.83 billion a year earlier. The contrasting figures reflect the growing impact of taxation on the company’s final earnings and raise questions about how much of its improved operating performance will translate into stronger returns for shareholders.

A major contributor to the increase in pre-tax profit was the reduction in the cost of producing its beverages. Cost of sales fell by 8.02 per cent to N286.67 billion from N311.64 billion in the same period last year, even as revenue increased.

The reduction lifted gross profit by 21.76 per cent to N195.94 billion from N160.92 billion. Gross profit margin consequently improved to approximately 40.6 per cent from 34.1 per cent, meaning the company retained a larger share of every naira generated in sales after covering production costs.

This improvement suggests that International Breweries gained greater control over its direct production expenses during the period. In a market where manufacturers must manage input costs, distribution expenses and consumers’ purchasing power, such savings can make a considerable difference to profitability.

However, the company’s revenue growth remains relatively weak compared with the improvement in its gross profit. The gap indicates that the earnings increase was largely supported by lower costs rather than a major increase in demand for its products.

Operating profit rose by 20.66 per cent to N80.86 billion from N67.01 billion in the corresponding period of 2025. Yet the improvement came alongside a substantial increase in administrative, marketing and distribution expenses, which climbed by 26.13 per cent to N116.16 billion from N92.09 billion.

Advertising, promotion and distribution costs increased to N75.14 billion from N54.98 billion. The rise points to the financial demands of maintaining market presence and getting products to consumers, even as the company benefits from lower production costs.

The development presents a balancing act for the brewer. Spending on advertising and distribution may support sales and brand visibility, but expenses that consistently grow faster than revenue could weaken the benefits of operational improvements. Sustaining the current level of profitability will therefore depend partly on whether the company can control these costs while improving sales.

Finance income also supported the performance. The company recorded N19.63 billion in finance income against finance costs of N10.05 billion, resulting in net finance income of N9.58 billion. This was higher than the N7.20 billion recorded in the corresponding period of the previous year.

The most significant pressure on the final earnings figure, however, came from taxation. Income tax expense surged by approximately 119 per cent to N35.93 billion from N16.39 billion. The increase absorbed much of the improvement in pre-tax profit and pushed profit after tax below the previous year’s level.

Earnings per share declined to 32 kobo from 34 kobo, showing that the increase in pre-tax profitability did not result in higher earnings on a per-share basis during the nine-month period.

The third-quarter figures offered further evidence of improving operating performance. Revenue for July to September rose to N140.54 billion from N131.58 billion in the same quarter of 2025, while gross profit increased to N54.65 billion from N39.34 billion. Quarterly profit before tax also rose to N15.65 billion from N12.69 billion.

Cash generation was another positive feature of the results. Cash generated from operations increased to N121.10 billion from N38.42 billion in the first nine months of 2025, while net cash flow from operating activities reached N114.43 billion. The stronger cash flow provides the company with resources to support business operations and investment.

International Breweries recorded capital expenditure of N85.13 billion during the period and reported no outstanding bank loans or overdrafts at September 30, 2026, although lease obligations and other liabilities remained. Cash and cash equivalents stood at N103.74 billion, down 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 in September. The company also completed a capital reorganisation that eliminated accumulated losses of N191.03 billion before the capital return.

For investors, the results present a mixed outlook. Improved production efficiency and stronger operating cash flow indicate progress, but limited revenue growth, rising commercial expenses and higher tax costs remain important concerns.

International Breweries’ next challenge will be to turn its improved cost structure into sustained sales growth and stronger after-tax earnings. The nine-month results show that profitability can improve even when revenue growth is modest, but the lasting strength of that recovery will depend on whether the company can protect its margins while delivering greater value to shareholders.