Nigerian Breweries Plc reported that it spent N57 billion on advertising in the 2022 fiscal year, along with its plan to ask shareholders for permission to take out an inter-company loan for €110 million in order to pay off its past-due bills.
The company’s Managing Director/CEO, Mr. Hans Essaadi, said during a pre-annual general meeting in Lagos that the loan would guarantee that there would be no production halt or any disturbance to the company’s activities.
He emphasized that compared to other alternative sources, the loan’s interest rate and term were better and more flexible.
He pointed out that the idea of more excise tax increases—including big ones that are currently the subject of rumors—would have a catastrophic impact on the company’s operations.
According to him, the company’s profitability in 2022 was significantly impacted by FX loss.
For Nigerian Breweries, having access to foreign exchange has remained a problem. When there wasn’t enough currency at the official windows, the increase in our trade payables was mostly caused by unpaid bills to our international trading partners, Essaadi added.
The company’s consolidated financial statement also shows that the cost of advertising and sales promotion increased from N40,530,114,000 in 2021 to N57,068,804,000 in 2022.
The company experienced a 26 per cent sharp rise in revenue, growing from N437,195,534,000 in the 2021 financial year to N550,477,627,000 in 2022.
The CEO also disclosed that despite the economic headwinds and the highly competitive business landscape, the company remained resilient in delivering value to its customers while ensuring increased profitability.
He added that despite the volatility of the business environment caused by the issue of forex scarcity, inflation, insecurity, and energy crisis, the company remains committed to mitigating the impact of the current economic crisis.
“We have the right processes in place, whether there is digitalization in the route to consumers. We found out how to optimize our marketing department to ensure we are a leading business moving forward. One of the challenges is poverty in this market. Although we have been in the market for 76 years, the challenges will continue to be in 2023. Hyperinflation will continue to happen and will put pressure on disposable income. This will affect economies including our business.
“We will continue to show leadership in this market. We will find ways to mitigate the challenges by being as effective and efficient as possible. We would continue to listen to what the next generation of consumers wants and look at how we can make a difference. We remain committed to creating value for our shareholders. We have the right strategy in place to weather the storm and to continue to be successful.
“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.
Speaking on the rationale for the loan, Essaadi noted that the board 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.
