Nigerian Breweries Reports Stagnant 2012 Profit as Costs Rise

Nigerian Breweries Plc, a unit of Heineken NV that is the country’s biggest brewer by market value, said full-year profit was stagnant in 2012 as an aggressive expansion plan increased its costs.

Net income for the 12 months through December was 38.1 billion naira ($241 million), compared with 38 billion naira a year earlier, the Lagos-based company said in a statement published on the website of the Nigerian Stock Exchange today. Sales rose 20 percent to 252.7 billion naira while the cost of sales climbed 26 percent, it said.

The shares fell as much as 7.7 percent, the biggest decline in more than four years, and closed down 2.4 percent at 166 naira in Lagos, the commercial capital.

“The company is paying high interest cost on debt obtained for expansion, besides distribution expenses and related costs that are seen to be rising,” Chris Okoro, an analyst at Lagos-based Gorsord Securities Ltd., said by phone today. “Investors want to see expansion translated to profit growth.”

Nigerian Breweries acquired Sona Systems Associates Business Management Ltd. and Life Breweries Co. in 2011 to expand its capacity and add brands that include local beers Star and Gulder.

The company has advanced 12.9 percent this year, below a 20.1 percent gain on the Nigerian Stock Exchange All-Share Index.