AdminFinancial analysts have predicted a return to profitability for Nigerian Breweries Plc and other multinationals that were affected by foreign exchange crisis in the 2023 financial year.
This is coming as the company has announced strategic business recovery plans designed to return it to profitability following a loss of N106 billion in the 2023 business year, mostly as a result of the foreign exchange headwinds that occasioned a steep fall in the value of the Naira.
Join our WhatsApp ChannelThe recovery plans, among which are the raising of N600 billion through rights issue, the inclusion of a whiskey portfolio in the basket of offerings, and the temporary closure of two of its nine breweries, are envisioned to return the business to the green columns.
Nigerian Breweries, like many other companies in the Nigerian fast-moving consumer goods value chain, was forced by the steep plummet in the value of the naira to post losses, with the brewer announcing a loss of N106 billion, a result that sent tongues wagging as to the possibility of a positive performance in the 2024 financial year.
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Analysts have however shared their views on the future of the conglomerate in 2024, asserting that with a more stable foreign exchange market, the brewer, like most other big corporations will return to profitability in 2024,
Speaking on the impact of the naira exchange on corporate performance, the Managing Director and Chief Executive Officer of Lyceum Alliance Limited, a financial advisory and management consulting firm, Dr. Jekwu Ozoemena expects a positive economic outlook as the country’s currency continues to stabilize against the dollar and other major international currencies.
Ozoemena, who was at one time the Managing Director of Access Bank Zambia, blamed the poor performance of Nigerian Breweries on the steep drop of the naira in the foreign exchange market, adding that it contributed to more than 90 per cent of the loss the company posted.
“If you look at the 2023 annual result of Nigerian Breweries, for instance, the company actually performed well on most critical performance indicators but was shaken off the profits path by the external factor naira devaluation. For example, this company recorded a significant growth of more than N1 billion in assets, from N621 billion in 2022 to N797 billion in 2023. It also made significant savings in the marketing side of the business, spending N51 billion in 2023 as against N57 billion in 2022. This means that the company, given all other factors, would have made more profits in 2023 than in 2022, but these were undone by the rapid decline in the value of the naira between August and December 2023,” he stated.
He however said that with the recent gains of the naira against the dollar, and the expected stability of the currency over the remaining months of the year, the expectations are that most companies operating in Nigeria that were adversely affected by the unstable periods of the naira will recover and return to profitability.
On the business recovery plans recently announced by the brewing giants, Mr Ozoemena commended the bold initiatives, arguing that it was indicative of a management that is committed to retaining and rewarding the trust of its shareholders.
“I think you could see the strong commitment to recovering by the company. I might be wrong but the response by Nigerian Breweries represents the quickest and perhaps the boldest of all the companies affected by the foreign exchange challenges of the 2023 business year. While others are still unsure of the best foot to put forward, Nigerian breweries have made its plans clear and if they follow them through, I can tell you that they’ll get past the challenges of the past year quicker than anyone could imagine,” Mr Ozoemena, who, at various times, was the Deputy Managing Director of Access Bank Rwanda and Managing Director and CEO of Access Bank Zambia, said.
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