Nigerian Breweries Plc has announced that it spent N57 billion on advertising in 2022 financial Year, just as it announced the decision to seek shareholders’ approval for €110 million inter-company loan to enable it settle its overdue payables.
Speaking at a Pre- annual general meeting of the company in Lagos, its 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.
He noted that notion of further excise tax increases, including significant ones that are being rumored at this point in time would have a devastating effect on the company’s business.
According to him, forex loss was a major impact on the company’s profitability in 2022.
“Access to forex has continued to be an issue for Nigerian Breweries. The increase in our trade payables has been driven majorly by outstanding payments to our foreign trade partners as a result of the unavailability of enough forex at the official windows,” Essaadi said.
Meanwhile, according to the company’s consolidated financial statement, advertising and sales promotion expenses rose from N40,530,114,000 in 2021 to N57,068,804,000 in 2022.
The company experienced a 26 per cent sharp rise in revenue, growing from N437,195,534,000 in the 2021 financial year to N550,477,627,000 in 2022.
The CEO also disclosed that despite the economic headwinds and the highly competitive business landscape, the company remained resilient in delivering value to its customers while ensuring increased profitability.
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.
“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. One of the challenges is poverty in this market. Although we have been in the market for 76 years, the challenges will continue to be in 2023. Hyperinflation will continue to happen and will put pressure on disposable income. This will affect economies including our business.
“We will continue to show leadership in this market. We will find ways to mitigate the challenges by being as effective and 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. We remain committed to creating value for our shareholders. We have the right strategy in place to weather the storm and to continue to be successful.
“The biggest hit trade partner is IBECOR, a Belgian company (also part of the Heineken group) that supports us in the sourcing and procurement of critical raw and packaging materials required for our operations. To enable us to settle the long overdue payables to IBECOR, Heineken International is ready to make available a €110 million loan to Nigerian Breweries. Being an inter-company loan and considering the amount involved, shareholders’ approval is required,” he said.
Speaking on the rationale for the loan, Essaadi noted that the board reviewed the rationale for, and the terms of the loan, adding that it will, amongst others, ensure that there is no stoppage of production or any other disruption to the company’s operations.