Nigerian Breweries: High inflation rate, FX volatility caused N106bn loss in 2023

The Nigerian Breweries says soaring inflation rates and foreign exchange (FX) volatility contributed to its net loss of N106 billion in 2023.

In a recent statement published on the Nigerian Exchange Limited (NGX) on Tuesday, but dated April 12, Nigerian Breweries said it will conduct a company-wide restructuring as part of its strategic recovery plan following the loss.

Nigerian Breweries said the reorganisation is targeted at securing a resilient and sustainable future for its stakeholders.

“This move comes after the Company recorded a net loss of approximately N106 billion in its 2023 full year results,” the company said.

“The loss follows a combination of challenging economic factors ranging from heightened operational costs, continued pressure on consumer disposable income, escalating inflation rates, FX volatility, amongst others.”

In letters signed by Grace Omo-Lamai, the company’s human resources director and addressed to the leadership of the National Union of Food, Beverage & Tobacco Employees (NUFBTE) and the Food Beverage and Tobacco Senior Staff Association (FOBTOB), Nigerian Breweries informed both unions that its proposed plan would include operational efficiency measures and a company-wide reorganisation.

The business recovery plan, Nigerian Breweries said, entails “a rights issue; a review of the company’s current organisational structure and size as agreed with the industry union; the temporary suspension of operations in two of its nine breweries and an optimisation of production capacity in the other seven breweries — some of which have received significant capital investment in recent years”.

“As a result, and in accordance with labour requirements, the company invited the unions to discussions on the implications of the proposed measures,” the brewing company said.

“It would be recalled that the Company recently notified the Market of its plan to raise capital of up to ₦600 billion (Six Hundred billion naira) by way of a Rights Issue, as a means of restoring the Company’s balance sheet to a healthy position following the net finance expenses of N189 billion recorded in 2023 driven mainly by a foreign exchange loss of N153 billion resulting from the devaluation of the naira.”

On April 3, Nigerian Breweries said it would raise N600 billion through rights issue to reduce its debt burden.

‘WHY WE PLAN TO CONSOLIDATE OPERATIONS’

Speaking on the development, Hans Essaadi, managing director and chief executive officer, Nigerian Breweries, described the business recovery plan as strategic and essential given the continuous challenges of the operating environment.

“The tough business landscape characterised by double digits inflation rates, naira devaluation, FX challenges and diminished consumer spend has taken its toll on many businesses, including ours,” Essaadi said.

“This is why we have taken the decision to further consolidate our business operations for efficient cost management.”

He said it would also strengthen Nigerian Breweries’ operational and financial stability and help return its business to profitability.