Nigerian Breweries Declare N10.71bn Loss In Q1, Blames CBN’s Naira Redesign Policy

Nigerian companies have begun to recount the impact of the naira redesign policy of the Central Bank of Nigeria.

The country’s biggest brewery company, Nigerian Breweries said it recorded a loss of N10.7bn in the first quarter of 2023 due to the ripple effect of the controversial naira redesign policy of the CBN.

The company’s revenue declined by 10.5 per cent in the first quarter of 2023 to N123.3bn from N137.7bn recorded in the first quarter 2022.

The brewery company said in its financial report for the Q1 of 2023 that operating cost (Selling, Distribution & Admin. Expenses) rose 7.1 per cent to N42.35bn in Q1 of 2023, up from N39.3bn recorded in the same period of 2022.

Also, net finance expenses rose 552.5 per cent to N19.3bn, up from N2.96bn recorded in 2022.

The books showed NB lost N10.71bn in the review period as a result of the high input and operating expenses.

The apex bank began a naira redesign policy in 2022 where it introduced new N1,000, N5000, and N200 notes and said old notes will cease to be legal tender by January 31, 2023.

By February, the apex bank mopped up N2.1trn of the old notes and extended the deadline to February 10.

The controversial policy resulted in legal battles after Kogi, Kaduna and Zamfara state governors went to the Supreme Court to challenge the policy due to the resulting hardship.

The deadline was later extended to December 31, 2023.

Nigerian Breweries said, “The operating environment during the period under review was very challenging for businesses. The impact of the cash crunch which led to a near collapse of payment channels as well as the security and safety uncertainties associated with the general elections, created disruptions in the economy.

“These were in addition to the continuing headwinds of inflationary pressure with its impact on purchasing power, input cost, and operating expenses.

“The total brewed product market suffered a double-digit (mid-twenties) volume decline versus the same period in 2022. We were able to largely mitigate the volume decline impact on our Revenue due to our appropriate pricing strategy.

“Our operating profit was further impacted by a one-off reorganisation cost with a view to refreshing and restructuring the business to cope with current challenges for a sustainable future.”