Champion Breweries is gearing up for a public offering aimed at raising funds to facilitate its operational activities. This strategic move was underscored during the company’s ‘Fact Behind the Figures’ presentation at the Nigerian Exchange (NGX) on Tuesday. The presentation was a significant event as it marked efforts from the new core shareholder, EnjoyCorp, to swiftly position itself in the market. A key aspect of the presentation was the financial performance highlights of Champion Breweries, noting its unique standing as the only brewery to have registered a profit in the recently concluded financial year, despite a challenging economic environment.
Currently, Champion Breweries operates primarily within a regional market, with its focal areas being Akwa Ibom, Imo, Enugu, and Cross River State. Despite its relatively smaller presence compared to larger competitors, Champion Breweries is gradually solidifying its market foothold. For the financial year 2023, the company reported a revenue of N12.7 billion, which indicates a slight growth of 3 percent from N12.29 billion achieved in the previous fiscal year of 2022. However, the net profit was notably a concern; standing at N370 million, it reflected a sharp decline of 74 percent from the preceding year’s profit of N1.41 billion. This reduction also influenced the net profit margin, which fell from 11 percent to merely 3 percent in FY 2023.
In terms of return on equity (ROE), Champion Breweries showcased its efficiency with an ROE of 3 percent, placing it in a favorable position against its competitors, who generally reported negative return figures for the same fiscal period. This performance distinction is significant given the wider context of the brewing industry, which faced various financial challenges during the year. Champion Breweries’ ability to maintain a positive ROE speaks to its operational effectiveness and resilience in a competitive market that has not been kind to most of its contemporaries.
Addressing the reasons behind its profitability amidst lower overall financial indicators, Inalegwu Adoga, the managing director of the company, cited strategic measures that included raw materials hedging as the cornerstone of their operational strategy in 2023. This proactive approach enabled Champion Breweries to mitigate the risks associated with price volatility in key input materials like raw sorghum. Anticipating potential instability in material prices throughout the year, the company secured an advantageous supply arrangement well ahead of time, which played a crucial role in sustaining operations and profitability.
This hedging strategy stands out as an example of effective risk management within the company’s operational framework. By taking precautionary measures early on, Champion Breweries not only safeguarded its supply of essential materials but also positioned itself to navigate potential economic turbulence more effectively than its competitors. Such foresight in operational planning demonstrates a level of strategic agility that is vital for companies operating in unpredictable markets.
As Champion Breweries embarks on this public offering to gather funds, the essential review of their financial figures and strategic maneuvers suggests a firm commitment to not just maintaining but enhancing its market presence. The company’s efforts, spearheaded by EnjoyCorp, reflect a determination to build a more robust operational foundation while addressing the challenges tied to profit fluctuations and market competition. By leveraging insights gained from their current fiscal year experience, Champion Breweries aims to set a course for sustained growth and stability in an industry characterized by both opportunities and challenges.
