Nigerian Breweries Plc (NB) has unveiled plans to raise N600 billion capital through a rights issue, subject to shareholders’ approval. The announcement comes as the company seeks to address challenges posed by currency devaluation and high borrowing costs.
In a statement released on the Nigerian Exchange Limited (NGX), Uaboi Agbebaku, the Company Secretary, highlighted the board’s decision to recommend the capital raise at the upcoming Annual General Meeting (AGM). The move aims to mitigate the impact of the Central Bank of Nigeria’s currency devaluation and the substantial costs associated with the company’s existing debt structure.
The 2023 financial year marked Nigerian Breweries’ weakest performance in over a decade, attributed to the naira’s devaluation and escalating production costs amid double-digit inflation rates. The company reported a significant loss before tax of N145.22 billion in 2023, compared to a profit before tax of N17.34 billion in 2022. Similarly, the profit after tax plummeted to a loss of N106.31 billion in 2023 from a profit of N13.19 billion in the previous year.
Agbebaku emphasized that the proceeds from the rights issue would be instrumental in alleviating the company’s substantial debt burden, thereby strengthening its balance sheet. Additionally, he expressed confidence that alongside ongoing cost-saving initiatives and operational efficiency measures, the company would regain sustainable profitability in the near future.
The proposed rights issue is part of Nigerian Breweries’ strategic plan to navigate through challenging economic conditions and position itself for long-term growth. It also underscores the company’s commitment to shareholder value creation and financial sustainability.
Despite facing headwinds such as weak purchasing power and increased operating expenses, Nigerian Breweries achieved a nine per cent revenue growth in 2023, reaching N599.64 billion compared to N550.64 billion in 2022. However, escalating foreign exchange losses, driven by exposure to foreign currency-denominated payables, contributed to the group’s net loss on foreign exchange transactions, which surged to N153.33 billion in 2023.
The AGM, scheduled for April 26, 2024, will provide shareholders with an opportunity to vote on the proposed capital raise and the subsequent increase in the company’s share capital to accommodate the new shares to be issued under the rights issue.
