Nigerian Breweries records N106bn loss, equity shrinks to lowest in years

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Nigerian Breweries Plc travelled on the path of losses all the way from the first to the final quarters in 2023, building a huge loss of N106.3 billion for the year.


The loss has drained off much of the company’s equity resources, which shrank from N180 billion in the prior year to N63.3 billion—the lowest equity cushion for the company in many years.

The audited financial report of the brewing company for the year ended December 2023, shows that the loss driver is a net foreign exchange (FX) loss of N153.3 billion, which swelled all the way from an FX loss of N26.3 billion in 2022.


Added to that is finance costs, which multiplied more than four times in the year to N36.4 billion at full-year, reflecting the company’s enlarged balance sheet debts.

Nigerian Breweries operated with interest bearing debts of N341.6 billion in 2023, close to three times the outstanding borrowings of N122.2 billion at the beginning of the year.

The last quarter produced N49.3 billion or 46.4 percent of the full-year’s loss, which extended the closing loss figure of N57 billion for the third quarter.

The final quarter loss was propelled by a further net FX loss of N19.5 billion in the quarter that topped up the third quarter closing level of N86.8 billion to the full-year figure of N106.3 billion.

Apart from net FX losses and the cost of finance, the company was pressured by increased production costs that consumed more than all the gains in sales revenue in the year.

While sales revenue grew by N49 billion to N599.6 billion in the year, production costs rose by roughly N50 billion to close at N387 billion. This means additional sales revenue was insufficient to cover the additional cost needed to produce the units of the products sold.

The cost-income imbalance was reflected by a decline in gross profit from N213.3 billion to N212.6 billion over the review period.

Further constraints came from a decline in other income and increases in sales, distribution, and administrative expenses. These led to a drop in operating profit from N51.7 billion in 2022, to less than N44 billion in 2023.

Foreign exchange losses with finance expenses created a huge net finance cost of N189.2 billion at full-year, advancing all the way from the net finance cost of N34.4 billion in the preceding financial year.

Net finance costs gulped the operating profit of N44 billion and produced a pre-tax loss of N145.2 billion for the year. This is against a pre-tax profit of N17.3 billion the company posted in 2022.

A tax credit of N38.9 billion helped to reduce the net loss for the year to N106.3 billion compared to an after-tax profit of N13.2 billion the company earned in 2022.

The loss for the year has dug a hole in the capital account of the company, wiping out retained earnings of N91.9 billion in the preceding financial year and creating a retained deficit of N26.3 billion at the end of 2023.

In effect, the company’s capital base has thinned down from N180.9 billion in 2022 to N63.3 billion at the end of 2023. This is the lowest capital stock for the brewing company in many years.

Nigerian Breweries has posted losses every quarter since the third quarter of 2022 and FX losses have been the major source of the operating pressure all along. In 2022, net FX loss multiplied close to four times to over N26.3 billion.