Nigerian Breweries’ operational loss widens by 386% in Q1

NIGERIAN Breweries (NB) Plc’s net loss increased by 386.13 per cent to N52.09 billion in the first quarter (Q1) of 2024.

The consumer goods company temporarily shut two of its nine factories in 2023 following an operational net loss of N106 billion.

The Managing Director, Hans Essaadi, told journalists in Lagos at a conference earlier this month that the loss resulted from naira depreciation, high inflation, foreign exchange (FX) challenges, and diminished consumer disposable income.

As a result, NB has planned to raise N600 billion through a rights issue, among other strategic decisions.

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Essaadi stressed that the business recovery plan entailed 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 optimisation of production capacity in the other seven breweries—some of which have received significant capital investment in recent years.

Despite the strategic plans the company said it was implementing, its operational performance has continued in a loss streak.

In its Q1 financial statements released on Friday, April 26, NB posted a net loss of N52.09 billion, relative to the N10.72 billion loss reported in Q1 2023.

In a statement on Friday, NB blamed its Q1 loss on increased interest rates resulting from upward adjustments in monetary policy rates and continued volatility in the foreign exchange market.

A check by The ICIR showed that NB’s negative performance arose significantly from its borrowing costs (finance expenses) to creditors, representing expenses outside its core business.

The company reported N90.85 billion in negative net finance costs in the review quarter, which rose by 370.2 per cent from N19.32 billion in Q1 2022, as its finance expenses exceeded its income.



    A net finance cost is the difference between financing the purchase of an asset (finance expenses) and the asset’s cash yield (finance income). Negative net finance costs occur when the expenses exceed the income.

    “Looking forward, while the Nigerian business environment remains turbulent in the short term, we maintain our unwavering belief in the country’s positive long-term market fundamentals.

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    “We are committed to navigating these challenges with the implementation of our business recovery plan, which is a business-wide reorganisation programme involving the optimisation of our operations for efficiency and capital injection via a rights issue with a view to improving our financial position,” NB said.

    In August 2023, The ICIR reported losses of most fast-moving consumer goods (FMCG) companies, including Nestle Nigeria, Dangote Sugar Refinery, and Cadbury Nigeria.

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