FX scarcity remains major impact on our profitability in 2022 — NB plc

Nigerian Breweries Plc has reiterated that access to foreign exchange remained a major impact on the company’s profitability in 2022, however, despite the challenges, it retained its leadership position in the industry.

The Managing Director/CEO, Mr. Hans Essaadi who disclosed this at the company’s Pre-AGM press briefing in Lagos, said the increase in NB Plc trade payables has been driven majorly by outstanding payments to its foreign trade partners as a result of the unavailability of enough forex at the official windows.

“The biggest hit trade partner is IBECOR, a Belgian company (also part of the Heineken group) that supports us in the sourcing and procurement of critical raw and packaging materials required for our operations.

“To enable us to settle the long overdue payables to IBECOR, Heineken International is ready to make available a €110 million loan to Nigerian Breweries. Being an inter-company loan and considering the amount involved, shareholders’ approval is required,” he said.

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Essaadi noted that the board has reviewed the rationale for, and the terms of the loan, adding that it will, amongst others, ensure that there is no stoppage of production or any other disruption to the company’s operations.

“It is also a ready and cheaper source of the much-needed forex. The interest rate and the tenor of the loan are better and more flexible than other alternative sources, “he said.

“Our first quarter of 2023 has been extremely difficult and we are not the only business that experienced the difficulties. We moved from FX scarcity to money scarcity. This is a fragmented market and what that means is that there are thousands of small outlets that operate with just cash and it is a known fact that Nigeria is an informal economy.

“This has been very tough for us but the good news is that we are slowly coming out of it but I am very cautious because of what we do not know in months to come, we are still yet to see the new government to be sworn in and so until then, we will be cautious.

The good thing is that cash is slowly coming back into the economy and we are seeing our numbers improving and we were in dire need of that. We had to take a loan consideration which will go through the process of approval including the financing cost,” he said.

Essaadi, however, noted that it is the firm’s belief that as a big partly alcoholic beverage and partly non-alcoholic beverage company, it would have to pay its duties and it respectfully wants to pay its duties and taxes in full.

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He however noted that at the same time, the notion of further excise tax increases, including significant ones that are being rumored at this point in time would have a devastating effect on the company’s business.

Meanwhile, the Board of Directors of Nigerian Breweries Plc has declared a total dividend of N13.87 billion for its shareholders for the financial year ending 31st December 2022.

The dividend which is subject to shareholders’ approval at the forthcoming Annual General Meeting (AGM), represents 143 kobos per ordinary share of 50 kobos each.

The statement signed by Uaboi G. Agbebaku, the Company Secretary noted the total dividend is comprised of an interim dividend of N3.288 billion, that is, 40 kobos per share which were declared in October 2022, and a final dividend of N10.584 billion, that is, 103 kobo per share.