Naira devaluation triples Nigerian brewers' finance costs in H1

Nigerian beer makers have recorded a 152 surge in finance cost to N117.96 billion in the first half of 2023 due to the naira devaluation.

The beer makers saw finance costs rise to N117.96 billion in H1 2023 from N46.81 billion in the corresponding period of 2023.

Guinness Nigeria recorded the highest increase of 2401.9 percent growth, Nigerian Breweries followed with a record of 260.8 percent growth, International Breweries reported 127.9 percent year-on-year growth while Champion Breweries recorded a 12.7 percent increase.

“The biggest problem for a lot of consumer goods firms are FX losses because a lot of them have USD liabilities to import raw materials on credit and as they have their debt as books they need to convert it to naira, “Ayorinde Akinloye, an investor relations analyst at Seplat Energy Plc, said.

He told BusinessDay that brewers had higher cost problems, an inflation environment, the impact of raw materials cost, price of goods, and other raw materials that they use have an impact on their cost and their profit.

“FX pressure is the biggest impact on their performance. Inflation and FX are the two problems because as inflation affects them they are also increasing prices,” he said.

Brewers’ analysis

Guinness Nigeria

Guinness Nigeria recorded the highest finance cost year-on-year growth compared to peers in the first half of 2023.

The brewer reported a 2401.9 percent growth in finance cost of N53.29 billion in H1 2023 from N2.13 billion in the same period of 2022.

Guinness Nigeria’s cost of sales climbed to N151.31 billion in H1 2023 from N134.16 billion in the same period of 2022.

Guinness Nigeria, a Nigerian-based subsidiary of Diageo Plc of the United Kingdom, was incorporated in 1962 with the building of a brewery in Ikeja. The brewery was the first Guinness operation outside Ireland and Great Britain.

Nigerian Breweries