Despite increasing prices last year, Nigerian Breweries Plc, the biggest brewer in Nigeria, reported a loss for the first time in at least 11 years, according to data compiled by BusinessDay.
In the company’s latest audited financial statement, it reported an after-tax loss of N106.3 billion compared to a profit of N13.2 billion in 2022.
“The Nigeria business landscape experienced significant shifts in 2023 with substantial impact on 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, the company secretary, said in a statement.
He said high double-digit inflation rates (with food inflation at more than 30 percent), removal of subsidy on the premium motor spirit (fuel), devaluation of the naira, and foreign exchange scarcity further exacerbated the already difficult environment for the populace and businesses.
“Notwithstanding, the Company was able to grow its revenue by nine percent compared to the previous year aided by a positive price mix. However, the operating profit fell by 15 percent 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 N153 billion, the company recorded a net loss of N106 billion during the year.”
Last week, the company declared its intention to raise the prices of its products starting February 19 due to ongoing increases in input costs and the necessity to offset the impact.
This decision mirrors a previous action taken in August 2023, when Nigerian Breweries implemented price increases on specific products effective August 10, 2023.
“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,” Agbebaku said.
Further findings show that the company’s operating profit declined by 15 percent to N44.5 billion, primarily due to rising input costs, one-off reorganisation expenses, and other economic pressures.
However, amidst these challenges, revenue saw an 8.9 percent increase to N599.6 billion in 2023, driven predominantly by domestic sales amounting to N559.3 billion, while exports surged by 59 percent to N335.5 million.
Operating expenses rose by five percent to N171.13 billion, while net finance costs escalated to N189.2 billion from N34.4 billion in the previous year.
Other income recorded a decline to N2.95 billion from N2.98 billion.
Net cash generated from operating activities plummeted to a negative of N74.67 billion from a positive of N22.53 billion in 2022. Conversely, net cash from financing activities increased to N174.2 billion from N82.1 billion.
The company’s cash and cash equivalents stood at N39.6 billion, up from N22.2 billion in 2022.
Households and businesses across Africa’s biggest economy are weighed down by stalled income growth, rising prices, and amplifying the cost of living.
Nigeria’s annual inflation rate reached 29.90 percent in January, the country’s statistics agency reported last week as the naira continues to weaken.
The foremost inflation culprit in Nigeria today is the weakened currency. In January alone, the naira lost 21 percent, touching a record low of N1,530/$. This is largely because of the lingering disequilibrium in the forex market as dollar demand continues to outpace supply.
“It’s a bloodbath and conglomerates are being hammered,” a source familiar with the matter said.
