Nigerian Breweries: Here’s opportunity for shareholders to increase their stake

For existing shareholder of Nigerian Breweries Plc, this is a prime opportunity to expand your equities investment in one of Nigeria’s leading companies.

The biggest brewer in the country has been in the market since last month to raise N600 billion through rights issue to clear its N500 billion foreign exchange (FX) debt.

The subscription of Nigerian Breweries Plc rights issue of 22,607,491,232 ordinary shares of 50 kobo each at N26.50 per share which commenced on Monday, September 2 closes tomorrow Friday, October 11 2024.

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The brewer is offering to existing shareholders eleven (11) new ordinary shares for every existing five (5) ordinary shares held as at the close of business on Friday, July 12, 2024.

The company has battled foreign exchange (FX) losses, as the country continues to struggle with dollar scarcity.

During the Facts Behind the Rights Issue held at the Nigerian Exchange Limited (NGX), Ben Wessels Boer, finance director, Nigerian Breweries Plc said that the company is doing everything possible to cut down debt costs.

“For the local debt, we’re looking at all possible sources to make sure that we get the lowest possible loans within the market and we want to ask everybody all our shareholders to contribute and to fully subscribe, and in that way also the shares of all shareholders can remain the same,” he said.

When asked about the prospects of future profitability for the company, Hans Essaadi, managing director/chief executive officer, of Nigerian Breweries Plc stated that the company had completely future-proofed the nature of the business to prevent future FX exposure.

“We are ready and we have completely future-proofed our business so that when demand in the market comes back and despite the painful measures in this administration, mid- long-term, our efforts will bear fruit. We currently have over-capacity, which is not a nice thing to have in the short term, but for the long-term, we’re ready when the time comes,” he stated.

Read also: Nigerian Breweries focuses on lower debt cost as rights issue opens

Essaadi had noted that, “The tough business landscape characterised by double-digit inflation rates, naira devaluation, FX challenges, and diminished consumer spend has taken its toll on many businesses, including ours”.

Vetiva Advisory Services Limited and Stanbic IBTC Capital Limited are issuing houses/financial advisers of the rights issue which was approved on August 22, while the stockbrokers are Stanbic IBTC Stockbrokers Limited; Vetiva Securities Limited; Foresight Securities & Investments Limited; Greenwich Securities Limited; and Lighthouse Capital Limited.

Nigerian Breweries said it continues to navigate the challenging operating environment characterised by soaring inflation, exchange rate volatility, security challenges, elevated input costs, and rising cost of living.

“As a central feature of NGX strategy, the facts-behind-the-figure platform supports our mission to enhance transparency and stimulate engagement in the capital markets. We are pleased that Nigerian Breweries has chosen this platform to present its financial performance, operational updates, and strategic plans for its rights issues,” said Jude Chiemeka, chief executive officer, Nigerian Exchange Limited while commending the brewer for presenting its financial performance and seeking subscription for its rights issues.

Further look at the H1’24 financial results of Nigerian Breweries shows Loss Before Tax (LBT) printed higher by 71.5 percent to N116.341billion from N67.844billion in H1’23.

“Despite these headwinds, the Company has demonstrated resilience and is on the path to recovery in its operations. Revenue grew by 73percent in the half year compared to the same period in 2023.

“The growth was driven by strategic pricing, innovation, volume and market recovery. Gross Profit grew by 42percent, although lower than the rate of growth in revenue, due to a 93percent increase in the cost of goods sold driven by currency devaluation and inflation,” Nigerian Breweries said in its earnings release.

Essaadi said that in the 6 months ended June 30, 2024, Nigerian Breweries demonstrated resilience “and is on the path to recovery as seen in the results delivered despite the challenging external environment characterised by high inflation and heightening operating costs.”

Nigerian Breweries Plc continues to navigate the challenging operating environment characterised by soaring inflation, exchange rate volatility, security challenges, elevated input costs, and rising cost of living.

It recently announced its unaudited and provisional results for the half year (six months) ended June 30, 2024 which showed the group reported Loss After Tax (LAT) of N85.199billion as against LAT of N47.599billion in H1 of 2023, representing an increase by 79 percent.

Though, the brewer’s group revenue grew by 72.9 percent to N479.767billion from N277.419billion in H1’2023, its net finance expense spiked by 60.5percent to N154.480billion from N96.223billion.