Nigerian Breweries has assured that the company is currently restrategising to reduce impact of foreign exchange exposure and uncertainty in its operations to enhance sustainable profitability.

At the ‘Facts Behind the Offer’ of the company held at the Nigerian Exchange Limited (NGX) in Lagos, yesterday, the Managing Director, Hans Essaadi, said the company would also rev up its local sourcing and backward integration programme to hedge against volatilities and external shocks in business operations.

The company is embarking on a capital raising of N599.1 billion by way of a Rights Issue.
Essaadi said the devaluation of the Naira, the lack of access to hard currency, and high interest rates has led to significant pressure on the net profit, noting that the proceeds from the fund would help reposition its balance sheet and reposition the firm to add more value to shareholders.

Essaadi described the nation’s operating environment as unpredictable, while expressing the company’s optimism on the long term growth of Nigeria market. He noted that while the company was ramping up efforts in areas possible to return to profitability, Nigeria’s volatility and the broader economic challenges were impacting its performance.

“We have completely future-proofed our business. Some measures taken by the new administration in the country are very painful, but the believe is that we would begin to see positive outcomes in the mid-long term. “The moment we see inflation, interest rates and other economic indicators become better, I can assure you that the results will be better.

Essaadi revealed that Heineken, the parent company, holding over 67 per cent of its equity had suspended the interest they charged on their foreign loan to enable to company meet up with the financial obligations. He added that the company remained committed to returning to profitability to add more value to shareholders.

“We have been in this market for nearly 80 years and weathered many storms. This rights issue is essential to stabilising our balance sheet and ensuring long-term growth,” he said.

The Company’s Secretary, Uaboi Agbebaku, explained that the proceeds will be used to clear the company’s payables, including N328 billion in FX debts and N263 billion in repayments of local obligations.

Agbebaku stressed that the move is aimed at eliminating FX losses from the company’s balance sheet and reducing its interest burden on local debts, amid Nigeria’s 26 per cent Monetary Policy Rate (MPR).

“Our FX losses are substantial, and clearing these obligations will stabilise our profit and loss accounts. We are also working to reduce local bank debts. The impact of that also is that it will eventually reduce the interest burden that we are carrying, which has been a significant financial strain,” Agbebaku stated.

Shareholders urged the company to mitigate future FX risks by explore forward-looking strategies, including backward integration and increased investment in Research and Development to reduce dependence on imported raw materials.