NB PLC proposes recapitalisation scheme, seeks shareholders’ approval to raise N600bn

Nigerian Breweries Plc is proposing a recapitalisation scheme by way of rights issue, and will seek its shareholders approval to raise fresh capital of up to N600 billion at its forthcoming  Annual General Meeting scheduled for April 26 in Lagos.

Addressing journalists at the pre-annual general meeting press conference in Lagos recently, Managing Director/CEO of NB Plc, Hand Essaadi said the fresh capital would be used to settle outstanding foreign exchange payables and part of local bank facilities.

He said the capital restructuring by way of a rights issue is the best option to return the company to profitability, and will also allow shareholders to acquire more shares in proportion to their holding.

” Heineken N.V has indicated readiness to support the recapitalisation proposal and to take up and pay for its portion of the shares that would be allotted to it. This again shows the long-term commitment of Heineken N.V to NB Plc

Speaking on the company’s performance in 2023, Essaadi listed high inflation, naira devaluation, volatile foreign exchange market and pressure on consumer’s disposable income as some of the factors that negatively affected performance in 2023.

“Our revenue grew from N551 billion in 2022 to N600 billion in 2023 while the operating profit declined by 15 per cent from N53 billion in 2022 to N45 billion in 2023 due to higher cost and one-off reorganisatio cost.

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However, despite the strong and aggressive cost savings measures, the company recorded a net loss of N106 billion due to the impact of naira devaluation which resulted in foreign exchange loss of N153 billion, and interest  costs on loans and borrowing for capacity expansion,” he added.

“The 2023 results  were impacted by the significant shifts in the business landscape with substantial impact on the businesses and livelihoods nationwide. These include the redesign of the Naira notes which resulted in cash shortages that severely hampered social and economic activities nationwide and set the tune for a turbulent year.”

He also said the high double digit inflation rates, removal of fuel subsidy, devaluation of the Naira, foreign exchange scarcity further exacerbated the already difficult environment for businesses in the country.

Essaadi explained that these factors significantly affected consumer disposable income due to increased input costs from the removal of fuel subsidies and the foreign exchange situation.

He noted that the company’s long-term outlook remained positive with Nigeria’s young population and its position as the largest economy in Africa to spur growth and improved performance going forward.

“The outlook for market fundamentals remains positive with positive long-term fundamentals such as rising and young population, urbanisation, and the largest economy in Africa.”

“However, short-term volatility to manage includes devaluation and high Inflation, insecurity, pressure on disposable consumer spending and the Japa syndrome.”

“Our 2024 recipe for success is hinged on our strong business recovery plan to continue strong cost management and further optimisation of our operational footprint.”

“We would continue to leverage our strong portfolio, exciting innovations, delight our customers with exciting new portfolios, while prioritising our employees, communities and stakeholders,”

Essaadi emphasized that the company’s enduring strategy for business growth, profitability, and delivering shareholder value was key to its resilience during the year.

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Earlier in his remark, the company’s marketing director, Emmanuel Oriakhi stated that while 2023 was tumultuous, NB PLC remained focused on strategic initiatives of driving cost efficiency, market leadership through the rich portfolio of its strong brands.

“We were nevertheless able to deliver organic net revenue growth by a high-single-digit of 9 per cent while maintaining our leadership position in the market due to strong performance by the premium brands led by Heineken.

“However, the margins contracted  significantly as I put price costs, mainly caused by inflation, commodity price and naira devaluation  persistently rose faster than the price adjustments,” he added

Recently, the company announced plans to suspend operations in two of its nine production plants in Nigeria as part of measures to deal with the harsh operating environment in Nigeria.

Nigerian Breweries was listed on the floor of the Nigerian Stock Exchange in 1973. As at 31st of December 2023, it had a market capitalization of approximately N370 billion, making it one of the largest companies in Nigeria by market capitalization.