Nigerian Breweries Loses N106 billion, Plans Temporarily Shut Down of Two Plants
Following the recent announcement of its business recovery plan, Nigerian Breweries Plc, officially announced on the Nigerian Exchange Limited (NGX) plan to temporarily shut down two of its plants as part of reorganisation.
Thisdaylive.com reports that the move came after the company recorded a net loss of approximately N106 billion in its 2023 full year results.
The loss followed a combination of challenging economic factors ranging from heightened operational costs, continued pressure on consumer disposable income, escalating inflation rates, FX volatility, amongst others.
In letters signed by the Company’s Human Resources Director, Grace Omo-Lamai, and addressed to the leadership of the National Union of Food, Beverage & Tobacco Employees (NUFBTE) and the Food Beverage and Tobacco Senior Staff Association (FOBTOB), the company informed both Unions that its proposed plan would include operational efficiency measures and a company-wide reorganisation that includes the temporary suspension of operations in two of its nine breweries.
As a result, and in accordance with labour requirements, the company invited the Unions to discussions on the implications of the proposed measures.
The company recently notified the market of its plan to raise capital of up to N600 billion by way of a rights issue, as a means of restoring its company’s balance sheet to a healthy position following the 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.
Speaking on the development, Managing Director/CEO Nigerian Breweries, Hans Essaadi, in a statement described the business recovery plan as strategic and vital in the face of a persistently challenging operating environment.
The tough business landscape characterised by double digits inflation rates, naira devaluation, FX challenges and diminished consumer spend has taken its toll on many businesses, including ours.
“This is why we have taken the decision to further consolidate our business operations for efficient cost management.
“It will also improve our operational and financial stability and help return our business back to profitability, as we work together to secure the business for today and for future sustainable growth”, he said.
We recognise and regret the impact that the suspension of brewery operations in the two affected locations may have on our employees. We are committed to limiting the impact on people as far as possible and providing strong support and severance packages to all affected.
“We are also committed to supporting our host communities in ways that ensure they continue to feel our presence.
We remain wholly committed to having a positive impact on our host communities and our consumers; leveraging our strong supply chain footprints; excellent execution of our route to market strategy; and our rich portfolio of brands across the Lager, Stout, Malt, Soft drinks, and Energy drinks categories; and more recently, Wines and Spirits with the acquisition of Distell,” he added.
Nigerian Breweries recently added to its broad portfolio with the acquisition of an 80per cent business stake in Distell Wines and Spirits Limited, a local business in the wines and spirits category, as a demonstration of its resilient and forward-thinking strategy to deliver long-term value creation for its shareholders and other stakeholders.
The Nigerian Breweries’ Business Recovery Plan includes a rights issue; a review of the company’s current organisational structure and size as agreed with the industry union; the temporary suspension of operations in two of its nine breweries and an optimisation of production capacity in the other seven breweries, some of which have received significant capital investment in recent years.
CREDIT: thisdaylive.com
