NB Declares Worst Performance on FX Loss, Cost of Production

Nigeria Breweries Plc in its 2023 result and accounts marked its worst performance in over 10 years, attributable to the unification of the naira and hike in costs of production influenced by double-digit inflation rate.

The multinational brewery marker reported slow revenue growth amid weak purchasing power as other financial parameters such as cost of sales, operating expenses, and foreign exchange losses impacted the Group’s overall performance in the year under review.

Nigerian Breweries hits the highest revenue in 2023 financial year, driven by strong pricing in some of its products.

Nigerian Breweries reported N599.64billion revenue in 2023, representing an increase of nine per cent from N550.64billion in 2022. In the prior year, the group reported 26 per cent increase in revenue from N437.29billion in 2021.

In 2023, revenue in Nigeria stood at N599.31billiion from N550.43billion as export’s revenue moved from N210.53million in 2022 from N335.47million reported in 2023.

In 2023, Cost of sales (CoS) moved to N387.03billion, a growth of nearly 15 per cent from N337.331billion in 2022.

The interchange between revenue and cost of sales led to N212.61billion gross profit in 2023, representing an increase of 0.06 per cent from N212.48billion reported in 2022.

COST OF SALES

The group’s CoS/Revenue stood at 64.54per cent in 2023 from 61.3per cent in 2022, while gross profit margin stood at 35.5per cent in 2023 from 38.59 per cent in 2022.

Nigerian Breweries’s total operating expenses (OPEX) that comprise of selling & distribution expenses and administrative expenses closed the year under review at N171.13biillion, an increase of 4.4 per cent from N164billion reported in 2022.

The breakdown of OPEX showed N142.49billion selling and distribution expenses in 2023, a growth of 4.9per cent from N135.83billion in 2022, while administrative expenses stood at N28.64billion in 2023 from N28.15billiion in 2022.

The selling and distribution expenses accounted for 82.26 per cent of the total operating expenses (OPEX). The persistent increase in operating expenses was driven by the challenging operating environment.

The Group reported net loss on foreign exchange transactions moved to N153.33billion in 2023 from N26.34billion in 2022 as against N7.04billion in 2021, and it is on the back of higher foreign exchange losses as exposure from its foreign currency-denominated payables.

Since the Central Bank of Nigeria (CBN) announced the unification of the Naira in 2023, the local currency has fallen drastically.

The naira at the Nigerian Foreign Exchange Market (NAFEM) closed 2023 at N899.39 against the dollar from N448.05 against the dollar it closed in 2022.

Finance income closed 2023 at N513.24million in 2023 from N349.19million in 2022, while finance cost was at N36.39billion in 2023 from N8.42billion in 2022. Finance cost breakdown showed a N35.06billiion interest expenses on loans and borrowings in 2023 from N7.2billion in 2022, while unwinding of discount on employee benefits increased to N1.3billion in 2023 from N1.19billiion in 2022.

This brings net finance cost to N189.19 billion in 2023, representing an increase of 449.7per cent from N34.42billion in 2022.

Overall, the Nigerian Breweries recorded a loss before tax of N145.22 billion in 2023 from N17.34billion profit before tax in 2022, and it declared N106.31billion loss in 2023 from N13.19billion profit after tax reported in 2022.

MOUNTING LOANS & BORROWINGS

Nigerian Breweries in the 2023 financial year expanded its loans & borrowings, which contributed 46.63per cent to total liabilities.

The Group reported a total loan & advance of about N341.6 billion in 2023 from N122.25 billion in 2022.

The breakdown revealed that longterm loans and borrowings dropped to N136.28billion in 2023 from N2.42billion in 2022, while short-term loans & borrowings hits N205.32billion in 2023, an increase of 71.3 per cent from N119.8billion in 2022.

Nigerian Breweries last year accessed loans from government, and bank loans to finance its working capital.

Further breakdown of liabilities showed a non-current liabilities of N148.12billion in 2023, a growth off 43.4 per cent from N32.27billion in 2022, while current liabilities increased to N584.5billion in 2023 from N407.7billion in 2022, representing an increase of 43.4 per cent.

It brings Nigerian Breweries total liabilities to N732.6billion in 2023, representing an increase of 67 per cent from N439.97billion reported in 2022.

In the year under review, Nigerian Breweries reported N795.87billion total assets, a growth of 28.4per cent from N619.9billion in 2022.

As non-current assets increased to N568.31billion in 2023 from N464.47billion in 2022, current assets nearly doubled, hitting N227.6billion in 2023 from N155.42billion reported in 2022.

Following a N26.27billion deficit retained earnings in 2023 from N90.77billion retained earnings, Nigerian Breweries closed 2023 with N63.28billion total equity as against N179.9billion in 2022,

NB BLAMES OPERATING CLIME

The management in a statement said the business landscape experienced significant shifts in 2023 with a 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 doubledigit inflation rates (with food inflation at more than 30per 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.

“Notwithstanding, the Company was able to grow its revenue by nine per cent compared to the previous year aided by positive price mix. However, the operating profit fell by 15per cent due to higher input cost and one-off reorganisation cost despite strong and aggressive cost savings and other efficiency measures, “NB said.

“Coupled with the impact of the devaluation of the naira which resulted in a foreign exchange loss of N153 billion, the Company recorded a net loss of N106 billion during the year. 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, ”it added.