Hans Essaadi, CEO of Nigerian Breweries Plc, underscored the gravity of Nigeria’s economic woes, noting that purchasing beer has become a luxury beyond the reach of most citizens.
Essaadi made this statement during Monday’s investor call, which took place after the company unveiled its 2023 financial results.
‘It has been unprecedented year for our business in Nigeria. We saw a significant decline in the mainstream lager market as a result of Nigerian consumers no longer able to afford a Goldberg after a hard day’s work,’ Bloomberg quoted Essaadi as saying.
NB incurred a foreign exchange loss of N153 billion as a result of the depreciation of the naira for the fiscal year ending in December 2023.
Over the reviewed period, the company experienced a growth in revenue by 8.9 percent, reaching N599.64 billion from N550.64 billion.
However, there was a significant 449.7 percent increase in net finance expenses to N189.19 billion, leading to a loss of N106.31 billion for the brewer, compared to the N13.19 billion gain reported by the end of 2022.
Read also: Naira Devaluation Costs Nigerian Breweries ₦153bn In Forex Loss
In comments accompanying the financial results, the NB Board of Directors 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 30 per cent), 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.’
He added that despite the headwinds, ‘The company was able to grow its revenue by nine per cent compared to the previous year aided by a positive price mix. However, the operating profit fell by 15 per cent due to higher input cost and one-off reorganisation costs 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 N153bn, the Company recorded a net loss of N106 billion during the year.’
The board reiterated its commitment to drawing upon its extensive decades of operational experience in Nigeria to navigate through the current macroeconomic turbulence.
‘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,’ the board said.
In August, NB increased the prices of its products to offset the ongoing escalation in input expenditures.
NB’s product lineup includes a range of alcoholic beverages such as Star Lager, Gulder, Legend Extra Stout, Heineken, Goldberg, Life, and Star Radler.
The Central Bank of Nigeria’s actions to streamline the segments of the foreign currency market in June 2023 resulted in the devaluation of the Naira.
The fallout was evident as companies reported forex losses, contrasting with the banking sector’s advantage from FX revaluation gains.