Nigerian Breweries sees N600bn rights issue reducing debt burden after devaluation

…stock nears 52-week low following N106.308bn loss

Nigerian Breweries Plc has informed the Nigerian Exchange Limited and the investing public that at a specially convened meeting of the Board of Directors of the Company held on the 2nd of April 2024, the Board resolved to recommend to shareholders at the next Annual General Meeting (AGM), the raising of up to N600 billion capital by way of Rights Issue, subject to regulatory approvals. The company’s share price which closed at N29.05 on Wednesday is nearing a 52-week low of N27.95 as against 52-week high of N46.5.

Nigerian Breweries said due to the negative impact of the devaluation of the naira and the high cost of funds on its capital structure, especially on the Company’s debts, the proceeds from the Rights Issue will help to reduce the huge debt burden arising thereby leading to a healthier balance sheet.

The brewer’s audited results for the year ended December 31, 2023 shows its group revenue grew by 8.9 percent to N599.643billion from N550.638billion in 2022. In the review 2023 financial year, the brewer reported pre-tax loss of N145.224billion, from N17.341billion pre-tax profit in 2022. Also, it reported group Loss After Tax (LAT) of N106.308billion in FY’2023 from profit after tax (PAT) of N13.187billion in 2022. Also, basic loss per share stood at 1,280 kobo from basic earnings per share of 158kobo.

Coupled with ongoing cost savings and other operational efficiency efforts, the Board is optimistic about steering the Company back to the path of sustainable profitability in the near future.

The Board also resolved to recommend to shareholders at the AGM scheduled for the 26th of April 2024, the increase in the Company’s share capital to take care of the new shares to be allotted under the Rights Issue.

Nigerian Breweries in a February 16 note on its full year 2023 financials said, “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. High double-digit inflation rates (with food inflation at more than 30percent), removal of subsidy on 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 9percent compared to the previous year aided by positive price mix. However, the operating profit fell by 15percent due to higher input cost and one-off reorganisation cost 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.

“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,” Nigerian Breweries had said.