BY NKIRUKA NNOROM

The current year may not be rewarding for shareholders of Champion Breweries Plc, as the company may likely end the year on deficit going by the half year financial results recently released by the company.

A peep into the unaudited financial results for the period ended 30thJune, 2012, made available to the investing public through the Nigerian Stock Exchange (NSE) indicated that both earnings, pre and post tax profits, and other key performance indicators took a turn for the worst.

During the period under review, the company’s turnover slumped by significant 60.04 per cent to N127.979 million, as against N320.276 million in the corresponding period of 2011.

The gross profit nose-dived by 52.14 per cent from N96.634 million to N46.252 million, while the profit before tax slumped further from negative position of N249.530 million in the preceding year to another negative of N422.569 million in the review period.

The profit after tax also recorded the same fortune as the pretax profit, declining by the same margin to a negative position of N422.57 million.

The company’s cost of sales rose to N545.939 million compared to N415.412 million in the same period of 2011, representing 31.42 per cent increase. The administrative expenses witnessed went up to N220.582 million from N129.200 million, a 70.73 per cent increase. On the balance sheet side, the net asset rose to N2.83 billion as against N2.03 billion in 2011, indicating 39.4 per cent increase.

The result released last week was in contrast to the envisaged value addition the brewer would enjoy as a result of its acquisition by Consolidated Breweries Plc.

The Managing Director, Consolidated Breweries, Mr. Boudewijn Haarsma, has assured at that point that the partnership between the two companies would also afford Champion Breweries the opportunity to enjoy better growth prospects, thus increasing its bottom-line.

He said, “As a result of this transaction, the acquired company would have good opportunities arising from this partnership with Consolidated Breweries. The reason is that the transaction will, amongst other things, provide an even better avenue for further development of the Champion Lager Beer brand.

“It will also provide the company with access to expertise, synergies in all functional fields and, not the least important, increase the capacity utilisation of its brewery through possible manufacturing of Consolidated Breweries Plc’s brands in the future.”

He further stated that the partnership would enable Champion Breweries to have instant access to improved production capacity, which will allow it to address its current capacity constraints and further strengthen its platform for future growth.