Nigerian Breweries Plc has notified the Nigerian Exchange Limited (NGX) of its intention to raise up to N600 billion in capital through a Rights Issue in order to implement its strategic Business Recovery Plan, which aims to secure a resilient and sustainable future for its shareholders and other stakeholders.
This action comes after the corporation reported a net loss of around N106 billion in its 2023 full-year results. The loss was caused by a variety of economic issues, including increased operational expenses, sustained pressure on consumer disposable income, rising inflation rates, foreign exchange volatility, and high debt costs, among others.
The Rights Issue, which will be proposed to the company’s shareholders at the Annual General Meeting on April 26, is a measure to restore the company’s balance sheet to a healthy position following net finance expenses of N189 billion recorded in 2023, primarily due to a foreign exchange loss of N153 billion caused by the Naira’s devaluation.
The proceeds of the Rights Issue would help to lower the debt burden, opening the way for a stronger financial position. Combined with current efforts in cost-cutting initiatives and operational improvements, the Board is hopeful about returning the company to sustainable profitability in the near future.
Speaking on the event, Hans Essaadi, Managing Director/CEO of Nigerian Breweries Plc, hailed the Rights Issue as the first step in the company’s strategic recovery strategy for business continuity and future expansion in the face of a continuously challenging operating environment.
Essaadi stated, “Despite major mitigating steps, the current acceleration of the Naira depreciation, lack of access to hard currency, and high interest rates have put significant pressure on the net profit of Nigerian breweries. This is not sustainable, and now is the moment to fix the balance sheet by utilizing the proceeds of the rights offering to pay down the company’s debt.
“This Rights Issue will allow Nigerian Breweries to deliver on its strategic objectives in line with our recovery plan and give all our shareholders a unique opportunity to increase the number of shares they hold.”
Essaadi further mentioned that this approach is part of the company’s recovery strategy to maintain value for stakeholders and return the business to profitability.
He stated, “We have been in Nigeria for over 77 years, and while recent times have been hard for many Nigerian enterprises, we believe in the long-term growth of the Nigerian market, as indicated by our decision to provide this Rights Issue.
“We remain wholly committed to having a positive impact on our host communities and our consumers, leveraging our strong supply chain footprint, excellent execution of our route to market strategy and our rich portfolio of longstanding and innovative beverage brands across the lager, stout, non-alcoholic malt, soft drinks and energy drinks categories, catering to the varied preferences of our esteemed consumers.”
It should be noted that Nigerian Breweries recently expanded its portfolio by acquiring an 80 percent business stake in Distell Wines and Spirits Limited, a local wine and spirits company, as part of its resilient and forward-thinking strategy to deliver long-term value creation for its shareholders and other stakeholders.
Nigerian Breweries Plc (NB) is delighted to be a cornerstone of Nigeria’s brewing industry, manufacturing and promoting a varied range of high-quality beverages. With a rich history dating back to 1946, its 77 years of business reflect a long-standing dedication to the Nigerian market and its people.
