Nigerian Breweries seeks US$121m loan from Heineken to strengthen operations

NIGERIA – The board and management of Nigerian Breweries Plc (NB) plan to seek shareholders’ approval for an intercompany loan of €110 million (US$121.36m) from Heineken International at its forthcoming annual general meeting (AGM).

The subsidiary of the Dutch alcoholic group said the decision is based on the impact of inflation and other macroeconomic challenges to businesses.

Speaking at a pre-annual general meeting of the company in Lagos, the Managing Director/CEO, Mr. Hans Essaadi, said the loan would ensure that there would be no stoppage of production or any other disruption to the company’s operations.

He pointed out that the interest rate and the tenor of the loan were better and more flexible than other alternative sources.

According to the company’s consolidated financial statement, the company experienced a 26 percent sharp rise in revenue, growing from N437,195,534,000 in the 2021 financial year to N550,477,627,000 in 2022.

The stellar results were attained despite the economic headwinds and the highly competitive business landscape, proof of resilience in delivering value to its customers while ensuring increased profitability.

The forex loss was a major impact on the company’s profitability in 2022, as access to forex has continued to be an issue for Nigerian Breweries.

“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,” Essaadi said.

In the financial statement, the largest brewing company in Nigeria revealed that increased its advertising and sales promotion expenses from N40,530,114,000 in 2021 to N57,068,804,000 in 2022.

Mr. Essaadi explained that one of the challenges is poverty in the Nigerian market, projected to continue even in 2023.

The brewer also anticipates hyperinflation, a very high and typically accelerating inflation, to continue and will put pressure on disposable income, as well as affect economies, including its business.

“We will find ways to mitigate the challenges by being as 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,” Mr. Essaadi explained.

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.

The CEO also viewed that the notion of further excise tax increases, including significant ones that are being rumored now, would have a devastating effect on the company’s business.

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