Hans Essaadi, the Chief Executive Officer of Nigerian Breweries Plc, has highlighted the challenging economic situation in Nigeria, stating that citizens can no longer afford to buy beer. He made this statement on Monday, February 19, during the company's investor call following the release of its 2023 results.
Essaadi mentioned, "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 being able to afford a Goldberg after a hard day’s work," in an interview with Bloomberg.
Nigerian Breweries suffered a N153 billion foreign exchange loss due to the devaluation of the naira for the year ended December 2023. Despite growing its revenue by 8.9 per cent to N599.64 billion from N550.64 billion, the company faced a loss of N106.31 billion, compared to a gain of N13.19 billion at the end of 2022, with net finance expense rising significantly by 449.7 per cent to N189.19 billion.
Reacting to the financial results, the NB Board of Directors commented, "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."
They added, "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."
Despite these challenges, the company was able to grow its revenue by nine per cent compared to the previous year, aided by a positive price mix. However, operating profit fell by 15 per cent due to higher input costs and one-off reorganization costs, despite strong and aggressive cost savings and other efficiency measures. The impact of the devaluation of the naira, which resulted in a foreign exchange loss of N153 billion, led to the company recording a net loss of N106 billion during the year.
In response to the continued increase in the cost of inputs, Nigerian Breweries increased its prices in August. The company produces alcoholic products like Star Lager, Gulder, Legend Extra Stout, Heineken, Goldberg, Life, and Star Radler.
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