Market analysts and observers remain optimistic about the future of Nigerian Breweries, despite the substantial foreign exchange losses it has recorded amid the devaluation of the naira. In its recent unaudited financial results disclosed to the Nigerian Exchange Limited, Nigerian Breweries reported significant forex losses, which increased by approximately 84.83% from N86.83 billion as of September 2023 to N160.48 billion by the end of September 2024. This represented a notable rise, with a quarterly increase of N48.21 billion observed over the three-month period leading up to September. In June 2024, the company’s forex losses were reported at N112.27 billion, highlighting a concerning trend for one of Nigeria’s largest brewing firms.
Despite the financial challenges posed by currency devaluation, Nigerian Breweries has shown resilience in its revenue generation. The firm reported a remarkable 74.9% increase in its revenue, amounting to N703 billion at the conclusion of the third quarter. However, this growth did not translate into overall profitability. Instead, the brewer experienced a significant loss after tax, which surged by 161.39% to N149.50 billion. Analysts suggest that while these losses are concerning, they do not overshadow the company’s underlying strengths and potential for recovery. The prevailing sentiment among market experts indicates that the firm’s future prospects remain solid.
Mike Eze, Managing Director of Crane Securities, commented on the Q3 results and acknowledged the adverse effects of the declining naira on Nigerian businesses. He remarked that the current economic circumstances have been detrimental not only to Nigerian Breweries but to various other companies engaged in both local sourcing and imports. Nevertheless, Eze expressed optimism about the return of market stability, which he believes will benefit businesses committed to long-term investments. He praised Nigerian Breweries for its efforts to maintain its leadership in the market, attributing their revenue and gross profit growth to a determined approach to overcoming current challenges.
Chibueze Ona, Managing Partner of Francona Consulting, echoed the positive outlook expressed by Eze. He posited that Nigerian Breweries is on a path to reclaiming its reputation as one of the most valuable companies in Nigeria’s capital market. Ona commended the company’s management for their strategy to navigate the difficult economic landscape, emphasizing that despite the short-term struggles, the trajectory of growth is evident from the recent financial statements. He pointed out that the gap to profitability is closing, suggesting a potential turnaround in the near future for investors with a longer-term perspective.
Both analysts emphasized the significant hurdles that the Nigerian economy presents for businesses, particularly in an environment marked by currency volatility and inflation. The prevailing economic conditions, characterized by a weakened naira, have resulted in considerable volatility for both local and foreign entities operating in Nigeria. This situation necessitates a concerted effort from companies like Nigerian Breweries to adapt and develop strategies that address these challenges while remaining focused on growth.
In conclusion, Nigerian Breweries stands at a critical juncture, with the promise of considerable revenue growth overshadowed by alarming forex losses stemming from the devaluation of the naira. Yet, market analysts remain optimistic about the company’s potential for recovery and growth. The commitment of its management to navigate the headwinds of a challenging economic environment is seen as a strong indicator of its resilience. As the company embarks on a path towards reclaiming its profitability and reinstating investor confidence, stakeholders are urged to remain vigilant, poised for potential opportunities as the market stabilizes.
