Nigerian Breweries dips most in 2 weeks as earnings miss target

Nigerian Breweries Plc (NB), the local unit of Heineken NV (HEIA), fell the most in two weeks as nine-month sales came in lower than estimates on weak consumer spending in sub-Saharan Africa's second-largest economy.

The stock of the West African nation's biggest brewer snapped four days of gains, retreating 1.1 percent to 174 naira at the 2:30 p.m. close in Lagos on Wednesday, which is its the biggest closing decline since Oct. 7.

Nigerian Breweries' relative-strength index rose on the day  above 70, according to data compiled by Bloomberg, a level that signals to some technical traders a stock is overbought.

Organic beer volume in Africa and the Middle East fell 2 percent, with non-beer volume dropping more than 10 percent, Heineken, the world's third-largest brewer, said Wednesday. Weak demand in Nigeria, the continent's second-biggest beer market, has weighed on earnings, Chief Financial Officer Rene Hooft Graafland said on a conference call. The Amsterdam-based company cut its outlook on full-year profit after third-quarter sales missed estimates.

'Earnings were below our expectations as volume growth disappointed,' Esili Eigbe, a Lagos-based analyst at Stanbic IBTC Holding Co. (STANBIC) with a sell rating on Nigerian Breweries, wrote in a client note  according to Bloomberg. 'Softness in consumer spending in Nigeria has resulted in weaker beer volume growth as the Nigerian consumer prioritizes spending.'

Nine-month revenue through September rose 5 percent to 190.3 billion naira ($1.2 billion) from 180.7 billion naira in the same period a year earlier, Nigerian Breweries said in a statement posted on the Nigerian Stock Exchange website. Net income climbed 6 percent to 26.8 billion naira.

The company's stock has advanced 18 percent this year, compared with the 33 percent gain of the Nigerian Stock Exchange All-Share Index. (NGSEINDX)