Nigerian Breweries Plans Severance Package For Victims of Re-organisation, N600bn Rights Issue

Nigerian Breweries Plc has assured the employees affected by its planned country-wide reorganisation of a severance package to limit the effect of the suspension of brewery operations on them.

Last week, the brewery giant announced the closure of two of its plants owing to challenging economic factors such as heightened operational costs, continued pressure on consumer disposable income, escalating inflation rates, and FX volatility.

It would be recalled that the Company recently notified the market of its plan to raise capital of up to N600 billion by way of a Rights Issue, as a means of restoring the Company’s balance sheet to a healthy position following the net finance expenses of N189 billion recorded in 2023 driven mainly by a foreign exchange loss of N153 billion resulting from the devaluation of the naira.

“We recognize and regret the impact that the suspension of brewery operations in the two affected locations may have on our employees. We are committed to limiting the impact on people as far as possible and providing strong support and severance packages to all affected. We are also committed to supporting our host communities in ways that ensure they continue to feel our presence”, stated the Managing Director of Nigerian Breweries, Hans Essaadi who described the re-organisation and the firm’s business recovery plan as strategic and vital in the face of a persistently challenging operating environment.

In a statement to the public via the NGX Group, and also to the National Union of Food, Beverage & Tobacco Employees (NUFBTE) and the Food Beverage and Tobacco Senior Staff Association (FOBTOB), Essaadi stated that the tough business landscape characterised by double-digit inflation rates, naira devaluation, FX challenges and diminished consumer spending has taken its toll on many businesses, including Nigerian Breweries.

“This is why we have taken the decision further to consolidate our business operations for efficient cost management. It will also improve our operational and financial stability and help return our business to profitability, as we work together to secure the business for today and future sustainable growth”, he said.

He assured of the firm’s whole commitment to the host communities and the consumers; leveraging its strong supply chain footprints; excellent execution of our route-to-market strategy; and its rich portfolio of brands across the Lager, Stout, Malt, Soft drinks, and Energy drinks categories; and more recently, Wines and Spirits with the acquisition of Distell.

It would be recalled that Nigerian Breweries recently added to its broad portfolio with the acquisition of an 80per cent business stake in Distell Wines and Spirits Limited, a local business in the wines and spirits category, as a demonstration of its resilient and forward-thinking strategy to deliver long-term value creation for its shareholders and other stakeholders.

The country-wide re-organisation by the brewery giant paints a gloomy picture of the Nigerian economy especially the real sector, which the Manufacturing Association of Nigeria (MAN) stated that it witnessed a shutdown of operations by 767 manufacturing companies while 335 experienced distress in 2023.

This development, which is attributed to various economic difficulties, including exchange rate volatility, rising inflation, and a general worsening of the investment climate, has taken a toll on the manufacturing sector, significantly impacting its performance and sustainability.

This move by the Nigerian Breweries comes after the Company recorded a net loss of approximately N106 billion in its 2023 full-year results. The loss follows a combination of challenging economic factors ranging from heightened operational costs, continued pressure on consumer disposable income, escalating inflation rates, and FX volatility, amongst others.

In letters signed by the Company’s Human Resources Director, Grace Omo-Lamai, and addressed to the leadership of the National Union of Food, Beverage & Tobacco Employees (NUFBTE) and the Food Beverage and Tobacco Senior Staff Association (FOBTOB), the company informed both Unions that its proposed plan would include operational efficiency measures and a company-wide reorganisation that includes the temporary suspension of operations in two of its nine breweries.

As a result, and by labour requirements, the Company invited the Unions to discussions on the implications of the proposed measures.