July 30, (THEWILL) – Nigeria’s foremost brewer, Nigerian Breweries Plc 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 Nigeria’s new government 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.
A study of the report showed that about 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.
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.
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
