Nigerian Breweries to Temporarily Close Two Plants Following N106 Billion Loss in 2023

Nigerian Breweries Plc has announced a business recovery plan that includes temporarily closing two of its plants following a staggering N106 billion loss in 2023.

The decision, which is part of a broader reorganisation effort, was made public on Tuesday.

The company’s financial struggles are attributed to a combination of economic factors, including heightened operational costs, continued pressure on consumer disposable income, escalating inflation rates, and foreign exchange volatility.

In response to these challenges, Nigerian Breweries plans to raise capital of up to N600 billion by way of a rights issue.

This initiative aims to restore the company’s balance sheet to a healthy position, particularly in light of the significant net finance expenses of N189 billion recorded in 2023, driven mainly by a foreign exchange loss of N153 billion resulting from the devaluation of the naira.

As part of the reorganisation, Nigerian Breweries will also focus on operational efficiency measures and a company-wide reorganisation, including the temporary suspension of operations in two of its nine breweries.

The company has invited the National Union of Food, Beverage & Tobacco Employees (NUFBTE) and the Food Beverage and Tobacco Senior Staff Association (FOBTOB) to discuss the implications of these proposed measures.

Managing Director/CEO Nigerian Breweries, Hans Essaadi, acknowledged the challenging business landscape and expressed the company’s commitment to limiting the impact on people as far as possible.

Nigerian Breweries will provide strong support and severance packages to all affected employees and continue to support its host communities in meaningful ways.

Despite the challenges, Nigerian Breweries remains optimistic about its future, leveraging its strong supply chain footprints, excellent execution of its route to market strategy, and its rich portfolio of brands across various categories.

The company recently added to its portfolio with the acquisition of an 80per cent business stake in Distell Wines and Spirits Limited, demonstrating its resilient and forward-thinking strategy to deliver long-term value creation for its shareholders and stakeholders.

The Nigerian Breweries’ Business Recovery Plan also includes a review of the company’s current organisational structure and size as agreed with the industry union, as well as an optimisation of production capacity in the other seven breweries.

Some of these facilities have received significant capital investment in recent years, further solidifying the company’s commitment to operational and financial stability.

As Nigerian Breweries navigates through this challenging period, the company remains focused on overcoming the current obstacles and emerging as a stronger, more resilient enterprise.