By Yinka Kolawole

Nigerian Breweries (NB) Plc said it has been forced to temporarily shut two of its 9 factories as part of its business recovery plan following the company’s operational net loss of N106 billion in 2023, occasioned by naira depreciation, high inflation, foreign exchange (FX) challenges and diminished consumer disposable income.

Managing Director of NB Plc, Hans Essaadi, who stated this in Lagos yesterday, at a media conference, said that it was imperative for NB to embark on a business recovery plan to set the company back on the path of profitability, hence the decision to also raise N600 billion through a rights issue.

Essaadi who addressed the press along with other members of the company’s management team, stated: “The business recovery plan entails a rights issue; a review of the company’s current organisational structure and size; the temporary suspension of operations in two of its nine breweries and an optimisation of production capacity in the other seven breweries – some of which have received significant capital investment in recent years,” he stated.

According to him, in accordance with labour requirements, the company has invited the concerned workers’ unions for discussions on the implications of the proposed measures.

Essaadi described the business recovery plan as strategic and essential given the continuous challenges of the operating environment.

“The tough business landscape characterised by double digits inflation rates, naira devaluation, FX challenges and diminished consumer spend has taken its toll on many businesses, including ours.
“This is why we have taken the decision to further consolidate our business operations for efficient cost management,” he added.

Speaking specifically on the company’s performance in 2023, he said: “Our revenue grew from N551 billion in 2022 to N600 billion in 2023 while the operating profit declined by 15% from N53 billion in 2022 to N45 billion in 2023 due to higher input cost and one-off reorganisation cost, despite the strong and aggressive cost savings and other efficiency measures.

“However, the company recorded a net loss of N106 billion during the year primarily due to the impact of the devaluation of the Naira which resulted in a FX loss of N153 billion, and higher interest costs on loans and borrowings for capacity expansion.”

Due to the loss, the company’s board was unable to propose any dividend payment for the 2023 financial year, breaking from the age long tradition of consistent dividend payment.

The board has resolved to propose to shareholders for consideration and approval at its forthcoming annual general meeting (AGM), a recapitalisation scheme by way of rights issue to raise fresh capital up to N600 billion that would be used to settle the outstanding FX payables and part of the local bank facilities.