It’s Now Difficult for Many Nigerians to Afford Beer—NB CEO
During the investor call held on Monday to discuss Nigerian Breweries (NB) Plc’s 2023 results, Hans Essaadi, the Chief Executive Officer, remarked that the economic conditions in Nigeria have worsened to the point where citizens are unable to purchase beer.
“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 devaluation of the naira for the fiscal year ending in December 2023.
During the reviewed period, the company experienced an 8.9 percent increase in revenue, reaching N599.64 billion from N550.64 billion.
However, there was a substantial rise in net finance expenses, soaring by 449.7 percent to N189.19 billion.
Consequently, the brewer incurred a loss of N106.31 billion, contrasting with the gain of N13.19 billion recorded at the conclusion of 2022.
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 expressed its readiness to leverage decades of experience operating in Nigeria to navigate through the current challenges posed by macroeconomic conditions.
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“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 adjusted its product prices upward in response to the ongoing rise in input costs.
NB manufactures various alcoholic beverages such as Star Lager, Gulder, Legend Extra Stout, Heineken, Goldberg, Life, and Star Radler.
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In June 2023, the Central Bank of Nigeria unified segments of the foreign currency market, resulting in the devaluation of the Naira.
This devaluation impacted various companies, causing them to register forex losses. However, the banking sector performed more favorably as it experienced gains from FX revaluation.
