Hans Essaadi, the Chief Executive Officer of Nigerian Breweries Plc, stated that due to the economic challenges in Nigeria, many citizens can no longer afford to purchase beer.
He made this remark during the company’s investor call following the release of its 2023 results on Monday.
Essaadi highlighted that there has been a significant decline in the mainstream lager market, as Nigerian consumers find it difficult to afford a Goldberg beer after a hard day’s work.
The company reported a foreign exchange loss of N153 billion due to the devaluation of the naira for the year ending December 2023.
Despite growing its revenue by 8.9% to N599.64 billion from N550.64 billion, Nigerian Breweries faced a significant increase in net finance expenses, which rose by 449.7% to N189.19 billion. This resulted in the brewer incurring a loss of N106.31 billion, compared to a gain of N13.19 billion at the end of 2022.
The NB Board of Directors, in their comments accompanying the financial results, noted that the business landscape in Nigeria experienced significant shifts in 2023, with notable impacts on businesses and livelihoods nationwide. They highlighted challenges such as the redesign of the naira notes, leading to cash shortages that severely affected social and economic activities across the country.
“High double-digit inflation rates (with food inflation at more than 30 per cent), removal of subsidy on premium motor spirit (fuel), devaluation of the naira, and foreign exchange scarcity further exacerbated the already difficult environment for the populace and businesses.”
He added that despite the headwinds, “The company was able to grow its revenue by nine per cent compared to the previous year aided by a positive price mix. However, the operating profit fell by 15 per cent due to higher input cost and one-off reorganisation costs despite strong and aggressive cost savings and other efficiency measures. Coupled with the impact of the devaluation of the naira which resulted in a foreign exchange loss of N153bn, the Company recorded a net loss of N106 billion during the year.”
The board went on to state its preparedness to tap into its decades of experience of operating in Nigeria to weather the current macroeconomic headwinds.
“In a difficult operating environment, the board will ensure that the company builds on its more than 77 years experience of operating in Nigeria to cope with current realities. The company will continue to be resilient and forward-thinking leveraging our broad portfolio, strong supply chain footprint and passionate workforce to drive long-term value creation for its shareholders and other stakeholders,” the board said.
In August, NB reviewed the prices of its products upward to accommodate the continued increase in the cost of inputs.
NB produces alcoholic products like Star Lager, Gulder, Legend Extra Stout, Heineken, Goldberg, Life, and Star Radler.
The Central Bank of Nigeria harmonised the segments of the foreign currency market in June 2023 leading to a devaluation of the Naira.
The effect was felt by different companies that recorded forex losses. However, the banking sector faired better as they enjoyed FX revaluation gains.
Be First to Comment