Many Nigerians Struggle to Afford Beer, Says NB CEO
The economic strain in Nigeria has reached a point where many citizens can no longer afford to purchase beer, according to Hans Essaadi, the Chief Executive Officer of Nigerian Breweries Plc. Essaadi made this assertion during the company’s investor call on Monday 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,” Essaadi stated, as reported by Bloomberg.
Nigerian Breweries (NB) faced a staggering N153 billion foreign exchange loss due to the devaluation of the naira for the year ending December 2023. Despite this, the company managed to increase its revenue by 8.9 percent to N599.64 billion from N550.64 billion in the previous period. However, net finance expenses soared by 449.7 percent to N189.19 billion, resulting in a loss of N106.31 billion, compared to a gain of N13.19 billion at the end of 2022.In their commentary accompanying the financial results, the NB Board of Directors highlighted the tumultuous business landscape in Nigeria in 2023, citing factors such as cash shortages caused by the redesign of naira notes, high inflation rates exceeding 30 percent, removal of fuel subsidies, devaluation of the naira, and foreign exchange scarcity.
Despite these challenges, Essaadi noted that the company managed to grow its revenue by nine percent compared to the previous year, albeit with a 15 percent decrease in operating profit due to higher input costs and one-off reorganization expenses.
The devaluation of the naira, which resulted in a foreign exchange loss of N153 billion, further impacted the company’s financial performance, leading to a net loss of N106 billion for the year.Looking ahead, the NB Board expressed its commitment to leveraging its decades-long experience in operating in Nigeria to navigate the current macroeconomic challenges.
The board emphasized its resilience and forward-thinking approach, aiming to create long-term value for shareholders and stakeholders by capitalizing on its diverse portfolio, robust supply chain, and dedicated workforce.In response to the continued increase in input costs, NB adjusted the prices of its products upward in August.
The company’s product line includes popular alcoholic beverages such as Star Lager, Gulder, Legend Extra Stout, Heineken, Goldberg, Life, and Star Radler.The devaluation of the naira, initiated by the Central Bank of Nigeria’s harmonization of the foreign currency market segments in June 2023, had widespread effects across various industries, with many companies reporting forex losses. However, the banking sector fared better, benefiting from FX revaluation gains.Credit: Punch News