Hans Essaadi, the Chief Executive Officer of Nigerian Breweries Plc, has highlighted the severe impact of Nigeria’s worsening economic conditions on the beer market, stating that many citizens are now unable to afford beer.
This statement was made during the company’s investor call, which followed the announcement of its 2023 financial results.
According to Bloomberg, Essaadi remarked, “It has been an 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.”
The company reported a substantial foreign exchange loss of N153 billion for the year ending December 2023, primarily due to the devaluation of the naira. Despite an 8.9% increase in revenue to N599.64 billion, up from N550.64 billion, Nigerian Breweries faced a net loss of N106.31 billion, a drastic shift from the N13.19 billion gain in 2022. This loss was compounded by a sharp rise in net finance expenses, which surged by 449.7% to N189.19 billion.
The NB Board of Directors, in their commentary on the financial results, outlined the challenging business landscape in Nigeria in 2023.
They cited several factors, including the naira notes redesign leading to a cash shortage, high inflation rates, the removal of fuel subsidies, naira devaluation, and foreign exchange scarcity, as key contributors to the difficult environment for businesses and the general populace.
Despite these challenges, the company managed to grow its revenue by 9% compared to the previous year, aided by a positive price mix. However, increased input costs and one-off reorganization expenses, coupled with aggressive cost savings and efficiency measures, led to a 15% drop in operating profit.
The board emphasized their commitment to leveraging the company’s extensive experience in Nigeria to navigate these difficult times.
“In a difficult operating environment, the board will ensure that the company builds on its more than 77 years of experience 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 stated.
In August, in response to escalating input costs, NB increased the prices of its products. The company’s portfolio includes well-known alcoholic beverages like Star Lager, Gulder, Legend Extra Stout, Heineken, Goldberg, Life, and Star Radler.
The Central Bank of Nigeria’s decision in June 2023 to harmonize segments of the foreign currency market led to a devaluation of the Naira, impacting various sectors, with the banking sector notably benefiting from FX revaluation gains.
