According to Hans Essaadi, the CEO of Nigerian Breweries Plc, the country’s economic status has gotten so bad that its people can no longer afford to purchase beer.
During the company’s investor call on Monday after the release of its 2023 results, Essaadi made this statement.
“This year has been extraordinary for our company in Nigeria. Because Nigerian customers could no longer afford a Goldberg after a long day at work, we noticed a big fall in the mainstream lager market, Bloomberg quoted Essaadi as saying.
The devaluation of the naira caused NB to lose N153 billion in foreign exchange during the year that ended in December 2023.
The company’s sales increased by 8.9% over the reviewed period, from N550.64 billion to N599.64 billion. The Brewer saw a loss of N106.31 billion at the end of 2022, down from a gain of N13.19 billion due to a notable increase in net finance expense of 449.7% to N189.19 billion.
The NB Board of Directors stated, “The Nigerian business landscape experienced significant shifts in 2023 with substantial impact on businesses and livelihoods nationwide,” in remarks that accompanied the financial results. A chaotic year was ushered in by the redesign of the naira notes, which caused a cash scarcity that significantly hindered social and economic activity across the country.
“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 went on to state its preparedness to tap into its decades of experience of operating in Nigeria to weather the current macroeconomic headwinds.
“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.
To account for the ongoing rise in input costs, NB raised the prices of its products in August.
Star Lager, Gulder, Legend Extra Stout, Heineken, Goldberg, Life, and Star Radler are just a some of the alcoholic beverages that NB makes.
The devaluation of the Naira occurred in June 2023 as a result of the Central Bank of Nigeria’s harmonisation of the foreign exchange market segments.
Several businesses who reported FX losses felt the impact. But the financial industry fared better, benefiting from gains in FX revaluation.
