Nigerian Breweries Plc has commenced this financial year with a loss before tax of N65.58 billion in its unaudited first quarter ended March 31, 2024, from N17.43 billion loss before tax reported in the corresponding first quarter of 2022.
The breweries company from its profit & loss figures declared a N52.09 billion loss in Q1 2024 from N10.72 billion reported in Q1 2023.
The losses declared in Q1 2024 are on the backdrop of N90.85 billion net finance cost, an increase of 370.2 per cent from N19.32 billion in Q1 2023.
Nigerian Breweries in the 2023 financial year had announced a N145.22 billion loss before tax from N17.34 billion profit in 2022.
The multinational breweries company had reported an N153.33 net loss on foreign exchange transactions in 2023 from N26.34 billion in 2022, a key contributing factor to its losses.
The company was able to drive revenue amid the inflation rate, gaining 84.3 per cent to N227.12 billion in Q1 2024 from N123.3 billion in Q1 2023.
Company Secretary, NB, Uaboi Agbebaku in a statement said, “Our business demonstrated resilience and delivered strong operational performance in the first quarter of 2024 despite the sustained challenging business environment.
“Revenue grew by 84per cent over last year driven by product innovation and pricing to partly mitigate the effects of increasing input cost, and on the back of a weak Q1 2023 which was impacted by cash scarcity that followed the redesign of the naira notes.
“Results from Operating Activities grew by more than 1000per cent, underlying the strong topline performance and rigorous cost-saving initiatives in the period.
“However, 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 391per cent versus the same quarter in 2023.
“Looking forward, while the Nigerian business environment remains turbulent in the short term, we maintain our unwavering belief in the country’s positive long-term market fundamentals.
“We are committed to navigating these challenges with the implementation of our business recovery plan, which is a business-wide reorganisation programme involving the optimisation of our operations for efficiency, and capital injection via a rights issue to improve our financial position. The Board remains confident of our long-term strategy to deliver value to our Shareholders.”
Meanwhile, the shareholders of Nigeria’s Nigerian Breweries on Friday, have unanimously approved capital raising of N600 billion by way of rights issue at the 78th Annual General Meeting of the company held in Lagos.
With this development, the Board now has the authorization to undertake capital restructuring by way of a rights issue that 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.
Speaking during the Annual General Meeting, the Interim Chairman of the Board of Directors, Siep Hiemstra, explained that the decision to seek approval for the capital raising is in line with the company’s commitment to improving its financial position and returning the business to profitability while creating value for the shareholders.
According to Hiemstra, the objective of raising fresh capital to the tune of N600 billion is to enable the company to settle its outstanding FX payables as well as part of the local bank facilities, which would lead to the elimination of the naira devaluation risk or foreign exchange losses as well as the reduction of huge interest burden on the company. He disclosed that the majority shareholder, Heineken, has already indicated its readiness to support the recapitalization exercise by taking up and paying for the portion of the shares allotted to it.
Hiemstra said “Following the challenging year 2023, and the present volatility of the Nigerian business environment, we are focused on our strategic recovery plan backed by parent company Heineken, prioritizing efficiency and agility in all areas of operations; and maintaining market leadership through its rich portfolio of brands. We will continue to demonstrate resilience to deliver value for shareholders and all stakeholders”.
Some of the shareholders who spoke at the meeting described the recapitalization exercise as a step in the right direction noting that it would have a considerable impact on the company’s business growth and performance.
While applauding the company on its business recovery plan, the National Coordinator, Progressive Shareholders Association of Nigeria, Boniface Okezie, stated that there was no better time to make such an audacious move as this would help to significantly improve the company’s performance.
Okezie expressed profound appreciation to the board and management for providing exceptional leadership which has led to its resilience amid adversity.
He said, “We believe in the leadership of Nigerian Breweries and we are certain that soon enough, we will reap the benefits of these bold decisions.”
In his remarks, the Managing Director of Nigerian Breweries Plc, Hans Essaadi, conveyed his gratitude to the shareholders for their support, stating that the company remains committed to delivering long-term growth to its shareholders, despite the current economic headwinds and challenges.
“While we cannot influence the external environment, we are committed to maintaining resilience in the face of adversity. We are confident that the company will remain in a good position to weather the storm. We will sustain a strong cost management culture; optimize our operational footprint; and leverage our strong brand portfolio, exciting innovations and route to consumers to win in the market” he said.
