Why International Breweries' profit fell 5.74% in a year its pre-tax profit rose 21.86%
International Breweries' 9M 2026 profit after tax fell 5.74% to N54.51bn as income tax rose 119.25%, yet pre-tax profit grew 21.86%. STATART checks the effective tax rate, margins, cash and the odds FY2026 profit beats FY2025.
International Breweries filed its 9M 2026 accounts on 26 October, and the line that made headlines was profit after tax: down 5.74% to N54.51bn, with EPS slipping to 32 kobo from 34 kobo, per Nairametrics' read of the results. Above that line, revenue rose 2.12% to N482.61bn and pre-tax profit climbed 21.86% to N90.44bn. The stock closed at N8.80, 37.14% below its N14 start to the year.
A falling profit that the taxman wrote
The obvious reading is that the AB InBev-controlled brewer has stalled. I think that reading is wrong, and the NGX filing shows why. Pre-tax profit was N74.21bn in 9M 2025, confirming the base implied by the reported 21.86% change. Income tax jumped 119.25% to N35.93bn from N16.39bn.
STATART arithmetic: tax rose N19.54bn while pre-tax profit rose N16.22bn, so the tax bill grew 1.2x faster than the profit it was charged on. The effective tax rate moved from 22.1% to 39.7%. At last year's 22.1% rate, 9M 2026 profit after tax would have been about N70.47bn, a STATART estimate, not a reported figure.
Margins did the real work
The operating story is stronger than the after-tax number suggests. Cost of sales fell 8.02% to N286.67bn, lifting gross margin to 40.61% from 34.05%. STATART arithmetic: gross profit rose N35.02bn on just N10.04bn of extra revenue, 3.5x the sales gain. The filing gives no volume or price split, so I cannot tell you how much of the 2.12% came from cartons versus price; revenue in Q3 alone was N140.54bn against N131.58bn a year earlier, a 6.8% gain by my subtraction from the H1 2026 figures.
Cash confirms it. Cash generated from operations hit N121.10bn from N38.42bn, 3.2x. The company had no bank loans or overdrafts at 30 September, and the N84bn capital return drove most of a N99.71bn financing outflow.
The base rate says 22.1% was the oddity
Here is the context the headline misses. The audited FY2025 accounts showed pre-tax profit of about N89bn and net profit of about N51bn; African Financials' summary puts them at N88.96bn and N50.91bn. STATART arithmetic: FY2025 effective tax was 42.8%, and Q4 2025 alone produced an after-tax loss of N6.92bn on N14.75bn of pre-tax profit, implying a Q4 tax charge of N21.66bn. My judgement: last year's 9M rate was the under-provisioned outlier, not the norm.
Source: STATART calculations from company filings via Nairametrics, BusinessDay, African Financials. Chart: STATART Insights and Analytics
See the numbers
| Value | |
|---|---|
| 9M 2025 | 22.1% |
| FY 2025 | 42.8% |
| H1 2026 | 48.8% |
| 9M 2026 | 39.7% |
Peers sit in the same band. Nigerian Breweries paid N63.37bn on N156.33bn of H1 pre-tax profit, 40.5% by my arithmetic. Guinness Nigeria's 9M figures imply 34.0%. The Nigeria Tax Act 2025 set company tax at 30% plus a 4% development levy from 1 January 2026, so 34% is the new statutory floor before disallowed costs.
Signal or noise on the tax line
The 2026 path is noisy: H1 2026 ran at 48.8%, then Q3 booked a N0.55bn tax credit. I put the odds that FY2026's effective tax rate ends above 35% at 80%. To finish below, Q4 tax would need to stay under about N0.9bn on a Q4 that earned N14.75bn pre-tax last year.
Who it matters for
Minority holders: AB InBev Nigeria Holdings now owns 96.01%, so the N8.80 price reflects a thin 2.58% float outside the 97.42% substantial holdings.
Rivals and agencies: advertising, promotion and distribution spend rose 36.68%; in H1 it was 12.4% of revenue, against 17.4% for Nigerian Breweries' combined advertising and distribution lines.
Dividend watchers: the N191.03bn of accumulated losses was cleared from share premium on 23 September, leaving N54.51bn of retained earnings.
What would change my mind
- A Q4 2026 tax charge above N18.3bn, which would push FY2026 profit after tax below FY2025 if Q4 pre-tax profit repeats N14.75bn.
- Q4 cost of sales growing faster than revenue, eroding the 40.61% gross margin.
I put the odds that audited FY2026 profit after tax lands below FY2025's N50.91bn by 31 March 2027 at 20%, because 9M 2026 is already N3.60bn ahead. The 5.74% fall is a tax-timing story, not a brewing one, and I give 80% odds that the FY2026 tax rate stays above 35%.
Sources: NGX, International Breweries 9M 2026 financial statements · Nairametrics, International Breweries 9M 2026 · Nairametrics, International Breweries H1 2026 · BusinessDay, International Breweries FY2025 · African Financials, FY2025 annual report summary · BusinessDay, Nigerian Breweries H1 2026 · Nairametrics, Guinness Nigeria 9M 2026 · EY, Nigeria Tax Act 2025 highlights
