Namibia Breweries Limited (NBL) has reported a significant turnaround in its financial performance for the first half of 2025, driven by improved operational efficiency and a strategic shift towards local production. According to a recent analysis by Simonis Storm Securities, the company’s net revenue increased by 9.7% to N$2.10 billion, while operating profit surged by 79% to N$279.3 million.
The improvement is attributed largely to a 14.8% growth in domestic beer volumes and a conscious reduction in discounts offered to customers. Discounts fell to N$145.8 million from N$170.6 million the previous year, contributing to a expansion in operating margin from 8.1% to 13.3%. This reflects a fundamental strengthening of the business model rather than seasonal uplift.
Headline earnings per share nearly doubled to 97.8 cents, prompting the Board to declare an interim dividend of 96.29 cents per share – a payout ratio of 98.5%. This signals strong confidence in the company’s cash generation capabilities, although analysts note that post-dividend operating cash flow remained thin at just N$21.6 million.
A key driver of performance has been the company’s localization strategy. Namibia now accounts for 60% of total volumes, up from 56%, with more products being packaged locally. This has not only reduced reliance on imports but also improved margins through lower logistics costs and reduced royalty payments. Exports to South Africa declined by 13%, reflecting the uncertain future of the supply agreement beyond April 2025.
The company also demonstrated improved working capital management, reducing trade receivables to N$701.1 million from N$522.1 million a year earlier. Debtor days improved significantly, falling to approximately 61 days from 78. This enhanced cash conversion cycle supported operational cash flow of N$415.6 million, although liquidity remains tight with a net overdraft of N$274 million and a quick ratio of 0.68x.
On the balance sheet, interest-bearing debt decreased sharply, leading to a 38% reduction in finance costs. Interest cover improved from 5.4x to 12.5x, indicating stronger debt-servicing capacity. Nonetheless, the effective tax rate rose to 24.9% from 21.7%, slightly dampening net profit growth.
Looking ahead, management guidance remains positive for the seasonally stronger second half. However, Simonis Storm cautions that the focus should remain on protecting newly achieved margins rather than chasing volume growth. Key priorities include maintaining discount discipline, safeguarding local packaging margins, and ensuring a smooth transition to a new ERP system without disrupting order-to-cash processes.
The non-alcoholic portfolio was also noted as a growing segment, providing a hedge against regulatory and health-related risks. Sustainability metrics, including water conversion ratios, reached record levels, aligning with Namibia’s broader environmental and economic goals.
While the earnings rebound is encouraging, the report highlights lingering concerns over liquidity and reliance on overdraft facilities. The high dividend payout, though a sign of confidence, leaves limited buffer should trading conditions soften.
With an annualised return on equity of 17.7% and a forward price-to-earnings ratio of 14.7x, NBL appears to be on a firmer footing. Investors and stakeholders will be watching closely to see if the company can sustain this momentum through the remainder of the financial year.