Home Uncategorized Nigerian Breweries plunges to record half-year loss amid forex reforms

Nigerian Breweries plunges to record half-year loss amid forex reforms

Nigerian Breweries plunges to record half-year loss amid forex reforms

Nigeria’s biggest beer-maker Nigerian Breweries sank to its first half-year loss in at least ten years and its heaviest since it started brewing beer 1949 in Lagos.

The loss was recorded against the backdrop of the ripple effect of a series of currency reforms introduced by President Bola Tinubu, which are taking their toll on the half-year financials of a good number of companies in Africa’s largest economies.

The local subsidiary of Heineken Brouwerijen B.V relies on imports for almost half of its input costs, forcing it to incur as much as N85 billion in net loss on foreign exchange transactions.

That was about 12 times higher than the figure reported a year ago.

Roughly 83 per cent of the loss happened in the second quarter, the period during which Nigeria allowed its currency to weaken significantly in the boldest move in decades aimed at narrowing the spread between the official and black-market rates.

“The 2nd Quarter of 2023 was significantly impacted by various factors including the effect of fuel subsidy removal on consumers, naira devaluation and its effect on input cost, and mostly the revaluation of foreign exchange obligations,” the brewer said in a statement on Friday.

“Together with the cash crunch which materially impacted the 1st quarter, the Company’s net loss was escalated in H1,” it added.

Net loss came in at N47.6 billion, according to the unaudited earnings report issued on Thursday in stark contrast to a net profit of N18.7 billion one year prior.

Net revenue was modestly stronger at N277.4 billion, only growing 1.2 per cent. Cost of sales rose at a faster pace to N165.1 billion, dealing a blow to gross profit, which by weakened 5.4 per cent.

Nigerian Breweries announced in May it had received an approach from Heineken Beverages Limited South Africa for it to acquire the latter’s majority holding in Distell Wines & Spirits Nigeria Limited.

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Distell Nigeria, a unit of Distell International Limited, has interests in local production of wines and ciders as well as in the importation of wines, spirits and flavoured alcoholic beverages from Distell Group in South Africa.

Finance costs for the period climbed to N11.1 billion from N3.1 billion a year earlier.

Loss before tax stood at N67.8 billion compared to a profit before tax of N25.7 billion.

Nigerian Breweries majority-owns another listed beer-maker Champion Breweries, in which it holds an 86.4 per cent stake through Raysun Nigeria Limited.

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