Nigerian Breweries reports N149.50bn loss in Q3 as devaluation effect lingers

Nigerian Breweries Plc reported a net loss of N149.50 billion in its unaudited nine-month (9M) 2024 results, primarily driven by a substantial FX loss of N160.48 billion.

The largest brewer recently announced its unaudited and provisional results for the third quarter (nine months) ended September 30, 2024 which shows group revenue grew by 76.9percent to N710.872billion, from N401.801billion in 9M’2023.

Nigerian Breweries recently concluded its Rights Issue of N599.1 billion which is meant to reduce its foreign exchange (FX) losses. The rights issue opened for subscription on September 2, and closed on October 18, 2024. The company offered 22.61 billion ordinary shares at N26.50 per share, utilising a ratio of 11 new shares for every five held as of July 12.

“On the revenue front, the company reported a growth of 76.9percent year-on-year (YoY) to N710.87 billion, attributed to strategic pricing, innovation, and market recovery. However, the cost of sales grew faster by 101.1 percent YoY, as unabated inflation and currency pressures led to a 129.5 percent increase in raw material and consumable costs,” said Lagos-based CardinalStone Research analysts in their October 24 note.

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Nigerian Breweries gross profit increased by 37.6 percent to N209.912billion from N152.560billion.

“The Company remains resilient in the face of a challenging operating landscape in Nigeria marked by high inflation rates, deteriorating Naira value and increasing input costs. Revenue grew by 75 percent driven by strategic pricing, innovation and market recovery.

“Gross Profit grew by 36 percent although lower than Revenue growth due to a 99 percent increase in Cost of Goods Sold. Despite this, the Company recorded strong Operating Profit supported by a robust cost savings agenda.

“The increase in Net Loss was again significantly influenced by FX loss due to the devaluation of the Naira and high borrowing costs arising from higher interest rates,” Nigerian Breweries said in its statement signed by Uaboi G. Agbebaku, Company Secretary.

Nigerian Breweries said the rights issue will allow it to strengthen its balance sheet and significantly reduce FX exposure.

“This is part of the business recovery plan aimed at accelerating a reinstatement of the Company’s profitability. Our main shareholder, Heineken, supported the rights issue by exercising its rights in full. The Board remains confident in its long-term strategy to deliver value to our shareholders and reaffirms the company’s enduring commitment to winning with Nigeria through people development, strategic innovation, operational efficiency, and community impact,” Nigerian Breweries said.