• Thursday, May 23, 2024
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Nigeria’s biggest brewer see three-month loss widen to N52bn

Nigeria’s biggest brewer see three-month loss widen to N52bn

Nigerian Breweries Plc, the biggest listed brewer in the country, reported an after-tax loss of N52.1 billion in the first three months of this year, up from N10.7 billion in the same period of 2023, according to its latest financial statement.

The company attributed its loss to rising interest rates resulting from the upward adjustments in monetary policy rates and continued volatility in the foreign exchange market.

“Results from operating activities grew by more than 1,000 percent, underlying the strong topline performance and rigorous cost-saving initiatives in the period,” Uaboi Agbebaku, company secretary and legal director at Nigerian Breweries, said in a statement.

He, however, said that due to increased interest rates resulting from the upward adjustments in monetary policy rates and continued volatility in the foreign exchange market, the net loss in the period rose by about 391 percent versus the same quarter in 2023.

The Central Bank of Nigeria (CBN) increased the monetary policy rate, known as its benchmark interest rate, to 24.75 percent from 22.75 percent, making it the second consecutive time this year.

The major reason for the continued interest rate hike was to rein in inflation, which stood at 33.20 percent as of March, according to the National Bureau of Statistics.

Further analysis of the company’s statement shows that it recorded an increase in finance cost of 370.4 percent to N90.8 billion from N19.3 billion.

Financing costs, also known as the cost of finances, are costs, interests, and other charges involved in the borrowing of money to build or purchase assets.

During the period, the company reported a loss in its foreign exchange transactions to N72.8 billion from N14.6 billion, and interest expenses for the three months increased to N18 billion from N4.7 billion.

In its revenue, the firm disclosed that it increased by 84.2 percent to N227 billion from N123 billion,

“This was driven by product innovation and pricing to partly mitigate the effects of increasing input cost and on the back of a weak Quarter 1 in 2023 which was impacted by cash scarcity that followed the redesign of the naira notes,” it said.

It added that the sales margin rose to 36.1 percent on every unit of product or service the company sold in the first quarter. Nigerian Breweries’ cost of sales increased to N145 billion, up 83 percent from N79 billion.

The brewery company showed strong financial health during the period as its total assets amounting to N856 billion exceeded its liabilities of N845 billion, impacting its ability to cover its obligation.

While the funds attributed to the company’s shareholders dropped by 93 percent to N11.4 billion from N169 billion.

The company reported a negative net cash outflow of N68.3 billion from operating activities N6.9 billion from investing activities, and a positive N92.1 billion from its financing activities. The company’s cash and cash equivalents totaled N52.5 billion.

On April 26, shareholders of the Nigerian Breweries unanimously approved capital raising of N600 billion by way of a rights issue at the 78th Annual General Meeting (AGM) of the company in Lagos.

With this development, the board now has the authorisation to undertake capital restructuring through a rights issue.

This will enable all the company’s shareholders the opportunity to acquire more shares in proportion to their holdings, at a price determined by the Board, taking into consideration the market conditions.