Hans Essaadi, CEO of brewing giant, Nigerian Breweries Plc, , has said that the economic situation in Nigeria has deteriorated to the extent that citizens can no longer afford to buy beer.
Essaadi said this on Monday at the company’s investor call following the release of its 2023 results.
“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,” Bloomberg quoted Essaadi as saying.
NB suffered a N153bn foreign exchange loss due to the devaluation of the naira for the year ended December 2023.
For the period under review, the company grew its revenue by 8.9 per cent to N599.64bn from N550.64bn. Net finance expense rose significantly by 449.7 per cent to N189.19bn, dragging the brewer to a loss of N106.31bn, from a gain of N13.19bn at the end of 2022.
In comments accompanying the financial results, the NB Board of Directors said, “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.
“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.”
He added that despite the headwinds, “The company grew its revenue by nine per cent compared to the previous year aided by a positive price mix. However, the operating profit fell by 15 per cent due to higher input cost and one-off reorganization costs despite strong and aggressive cost savings and other efficiency measures. Coupled with the impact of the devaluation of the naira which resulted in a foreign exchange loss of N153bn, the Company recorded a net loss of N106 billion during the year.”
The board went on to state its preparedness to tap into its decades of experience of operating in Nigeria to weather the current macroeconomic headwinds.
“In a difficult operating environment, the board will ensure that the company builds on its more than 77 years experience of 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 said.
In August, NB reviewed the prices of its products upward to accommodate the continued increase in the cost of inputs.
NB produces alcoholic products like Star Lager, Gulder, Legend Extra Stout, Heineken, Goldberg, Life, and Star Radler.
The Central Bank of Nigeria harmonised the foreign currency market segments in June 2023, leading to a devaluation of the Naira.
The effect was felt by different companies that recorded forex losses. However, the banking sector faired better as they enjoyed FX revaluation gains.
