Namibia Breweries Limited (NBL) reported a 22.7% decline in after-tax profit for the six months ended 30 June 2026, earning N$153.8 million compared to the previous year. Headline earnings per share fell 24.3% to 74.0 cents. The company declared an interim dividend of 74.45 cents, representing a full distribution of earnings. This decline has raised concerns among analysts, including Simonis Storm, which has highlighted several risks facing the company.
Simonis Storm has expressed concerns over NBL's weaker export base, tighter liquidity, and dividend policy. The research house noted that the key issue was the reset of NBL's export business following the lapse of the Heineken Beverages minimum volume commitment in April. Beer volumes to South Africa fell 38.2%, contributing to a 20.6% decline in operating profit to N$221.8 million. The operating margin narrowed to 11.0% from 13.3%. This decline in export business has created pressure on NBL's full-year earnings outlook.
The weaker export base is a significant concern for NBL, with Heineken-related sales falling 13.2% to N$289 million. Only two months of the new supply model were reflected in the reporting period, and the full impact will be reflected in the second half. No replacement export volume has been disclosed, which has raised concerns about the company's ability to recover. Simonis Storm has cut its FY2026 headline earnings per share forecast by 17.3% to 230.7 cents and its FY2027 forecast by 11.9% to 267.8 cents.
NBL's liquidity position has also deteriorated, with the company using dividend-funded short-term borrowing. The company paid dividends of N$432.2 million during the six months, 34% more than a year earlier and above free cash flow of N$241 million. This has contributed to the overdraft increasing to N$508.4 million, while net debt rose to N$546.5 million. Simonis Storm noted that the company's net debt-to-equity ratio had increased to 25.2%, while the current ratio stood at 0.91 times and the quick ratio at 0.44 times.
Despite the tighter liquidity position, Simonis Storm noted that NBL's reported gearing and interest cover did not indicate immediate financial distress. However, the research house highlighted that the issue is capital allocation, pointing to the company's continued 100% dividend payout. Simonis Storm estimates that maintaining a 100% payout would exceed free cash flow to equity by about N$274 million over FY2027 to FY2031. This would require either another working-capital release or lower investment.
NBL's domestic business has shown resilience despite pressure on household incomes. Namibian beer volumes declined 3.3%, while cider volumes increased 15%. The company's total portfolio market share increased, with Windhoek Non-Alcoholic Lemon and Red Bull contributing to the broader portfolio. Net revenue declined 3.9% to N$2.02 billion, while gross sales of goods fell 4.8% to N$2.57 billion. The decline in revenue occurred despite discounts allowed falling 13.8% to N$125.7 million.
Simonis Storm has maintained a target price of 2 700 cents, up from 2 610 cents, attributing the increase to its discount rate rather than an improvement in its assessment of the business. At 3 225 cents, NBL shares trade at 12.0 times Simonis Storm's FY2027 headline earnings forecast. The research house estimates an expected total return of negative 9.1%, including dividends, within its stated Hold range. Key factors to watch include the company's ability to recover its export business and manage its liquidity position.
Key points
- NBL's weaker export base and tighter liquidity have raised concerns about the company's full-year earnings outlook.
- The company's continued 100% dividend payout has raised concerns about capital allocation and the need for either another working-capital release or lower investment.
- Simonis Storm has cut its FY2026 headline earnings per share forecast by 17.3% to 230.7 cents and its FY2027 forecast by 11.9% to 267.8 cents.
