Nigerian Breweries suffers N85.26bn FX Losses in H1 2023
Nigerian Breweries Plc has reported N85.26 billion net loss on foreign exchange transactions in half year ended June 30, 2023 amid the move by the Central Bank of Nigeria (CBN) to unify the foreign exchange market.
The multinational breweries company had reported N7.28 billion net loss on foreign exchange transactions in corresponding period of 2022.
The company’s net loss on foreign exchange can be attributable to the write-down the management took due to the impact of the unification of the naira on its loans.
The company carries foreign exchange-related loans with dollar-denominated interest rate components that triggered the losses. The depreciation of the Naira from about N460 against the dollar to about N790 against the dollar triggered the foreign exchange losses in the period under review.
In the period under review, Nigerian Breweries reported N11.15 billion finance cost in H1 2023 from N3.09 billion in H1 2022, driven by Interest expenses on loans.
The group reported N67.8 billion loss before tax in H1 2023 from N25.7 billion in H1 2022, and closed H1 2023 with a loss of N47.6 billion in H1 2023 from N8.7 billion profit after tax reported in H1 2022.
Company Secretary, Nigerian Breweries, Mr. Uaboi Agbebaku in a signed statement said: “In the first half of the year (H1), net revenue grew by a low single-digit driven by pricing to partially mitigate inflation and by premiumisation. Premium beer volume was broadly stable while flavoured beer grew in the low thirties, led by Desperados, which more than doubled in volume versus the same period in 2022.
“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. Together with the cash crunch which materially impacted the 1st quarter, the company’s net loss was escalated in H1.
“Despite these challenges, we see a positive trend in the results from operating activities (operating profit) which improved by more than 100% in the 2nd quarter versus the same quarter in 2022, driven by pricing, premiumisation, and strong cost management.
“Although the recent policy reforms are having a short-term impact on businesses and consumers, we believe they are beneficial to the long-term growth prospects of the country and the company. The Board remains committed to creating long-term sustainable value for our shareholders.”
