Following the successful completion of its N599 billion rights issue Nigerian Breweries Plc has announced that the proceeds from the capital raise have been instrumental in eliminating its foreign exchange (FX) debt entirely from its balance sheet, a move that mitigates its exposure to currency volatility.

Also, the rights issue, which recorded 92 per cent success, has facilitated a substantial reduction in the company’s local debt burden, bringing it down from approximately N600 billion to N200 billion.

According to the Managing Director, Hans Essaadi, the improvement in its financial position is expected to enhance the firm’s financial stability, lower interest costs, and improve cash flow and position the company for stronger operational performance in a challenging economic environment.

The development comes as several Nigerian companies grapple with the impact of foreign exchange losses and rising borrowing costs due to elevated interest rates.

At the company’s pre-yearly general meeting held in Lagos yesterday, Essaadi assured that by proactively addressing its debt obligations, the company is strengthening its balance sheet resilience and reinforcing investor confidence in its long-term growth strategy.

He assured that the firm remains committed to optimizing its capital structure and ensuring long-term sustainability.

Essaadi also disclosed that Nigerian Breweries is seeking shareholders’ approval to access alternative funding sources at more competitive interest rates.

This, he explained, would further reduce the company’s interest burden and enhance its business operations.

Company Secretary Uaboi Agbebaku described the rights issue as the largest in the Nigerian market, achieving a 91.6 per cent success rate.

“By December 18, 2024, all shareholders had received their allotted shares, following the Securities and Exchange Commission’s (SEC) approval on December 11.

“The approval facilitated the allotment of 20.71 billion new shares, enabling Nigerian Breweries to access the funds needed to settle its outstanding debts.

As part of its broader financial and operational strategy, Nigerian Breweries is intensifying efforts to increase local sourcing of raw materials to reduce its dependence on foreign exchange. Supply Chain Director Federico Agressi noted that the company is working closely with local suppliers, fostering research and innovation to boost domestic production of packaging and auxiliary materials.

He added that the company is constantly exploring new opportunities to enhance local sourcing and minimise exposure to exchange rate fluctuations.

Despite macroeconomic challenges, Nigerian Breweries reported a strong financial performance, delivering N1.1 trillion in group revenue, representing an 81 per cent year-on-year growth.

The company also recorded a 59 per cent increase in operating profit, driven by disciplined cost management strategies.

However, higher interest expenses and the impact of the naira’s devaluation on its FX-denominated payables led to a 34 per cent rise in net finance costs, which climbed to N252 billion.

This significantly affected the company’s bottom line, pushing its net loss up by 36 per cent to N145 billion.

With a restructured balance sheet, reduced debt burden, and a renewed focus on local sourcing, the company is positioning itself for a more resilient and sustainable future despite ongoing economic uncertainties.