Nigerian Breweries Plc, the biggest brewer in the country, recorded an after-tax loss of N106.31 billion, driven by foreign exchange losses that strained its financial performance.
The brewer swung to a loss from a profit of N105.8 billion in 2022, according to its latest financial statement.
CardinalStone Research, in its earnings report, said Nigerian Breweries’ FX losses strained the firm’s full-year earnings.
“In its 2023 results, Nigerian Breweries Plc reported an N106.3 billion loss in its earnings, following a 482.1 percent year-on-year jump in net loss on foreign exchange transactions, which stemmed from its deposits from imports of N16.2 billion (from N6.9 billion in 2022) and foreign denominated bank loans.”
Nigerian Breweries’ net loss on FX transactions surged to N153.33 billion from N26.34 billion during the period.
Revenue increased to N599.64 billion from N550.64 billion while cost of sales rose to N387.03 billion from N337.31 billion.
“On the sales front, the company recorded a topline growth of 8.9 percent, reflecting an increase in the price of its products,” analysts at Cardinalstone Research said. “Similarly, the cost of sales increased by 14.7 percent year-on-year owing to an increase in the cost of raw materials (+15.9 percent) and transportation (+15.3 percent).”
“The Nigeria business landscape experienced significant shifts in 2023, substantially impacting businesses and livelihoods nationwide. The redesign of the naira notes which resulted in cash shortage that severely hampered social and economic activities nationwide set the tone for a turbulent year,” Uaboi Agbebaku, its company secretary, said in a statement.
He said high double-digit inflation rates (with food inflation at more than 30 percent), petrol subsidy removal, naira devaluation, and FX scarcity further exacerbated the already difficult environment for the populace and businesses.
Selling and distribution expenses surged to N142.49 billion from N135.83 billion and administrative expenses surged to N28.64 billion from N28.15 billion.
Nigerian Breweries’ finance income surged to N513.24 million from N349.19 million while finance costs surged to N36.37 billion from N8.42 billion.
Hans Essaadi, managing director/CEO of Nigerian Breweries, said: “The business performance of 2023 reflects the challenging economic environment in Nigeria. These severe economic conditions include persistent cash scarcity, removal of fuel subsidies resulting in a notable surge in energy cost, naira devaluation, foreign exchange scarcity, and continued challenged consumer spending amid high inflation.
“Despite these challenges, the business recorded some progress, delivering a 9 percent growth in revenue aided by a positive price mix. Unfortunately, our efforts were undermined by the impact of the devaluation of the naira, causing an N153 billion loss on foreign exchange transactions.”
“The management stated that its strategy to improve the company’s returns in this tough macroeconomic environment was centered around reducing risk to the business by focusing on a positive price mix, efficient sales operations, strong and aggressive cost management, and other efficiency measures,” analysts at CardinalStone Research said.
