International Breweries Plc, a subsidiary of the global brewing giant Anheuser-Busch InBev (AB InBev), experienced a significant financial loss in the 2024 financial year, extending its streak of losses to seven consecutive years. The company reported a loss after tax of N113.61 billion, a substantial increase from the N70.03 billion loss recorded in 2023. This represents a 62.25% surge in losses year-on-year. This escalating loss trend began in 2018 with a relatively modest N3.87 billion loss, which subsequently grew to N27.79 billion in 2019. Although the loss dipped slightly to N16.08 billion in 2020, it has been on an upward trajectory ever since, reaching N17.66 billion in 2021, N21.63 billion in 2022, and culminating in the substantial N113.61 billion loss in 2024.
Despite these mounting losses, International Breweries achieved a remarkable feat in its revenue generation. The company reported a nine-year high revenue figure of N488.96 billion in 2024, a significant jump from the N260.59 billion recorded in 2023. This represents an impressive 87.63% year-on-year growth, demonstrating the company’s robust sales performance and market presence. This stark contrast between escalating losses and surging revenue underscores the complex financial challenges the company is navigating. The disconnect suggests that while the company is effectively driving sales and expanding its market reach, underlying factors are significantly impacting profitability.
The company attributes its persistent losses primarily to the challenging foreign exchange environment in Nigeria. Specifically, the company cites difficulties in accessing sufficient foreign exchange due to market illiquidity. This has resulted in substantial foreign exchange losses on the company’s dollar-denominated debt and liabilities, effectively eroding profitability despite the strong revenue growth. The devaluation of the Naira against the US dollar has amplified the cost of servicing these foreign currency obligations, contributing significantly to the escalating losses reported.
To address its foreign exchange challenges and improve its financial standing, International Breweries undertook a significant capital raising initiative in 2024. The company launched a rights issue program, aiming to raise N588 billion by offering 161,172,395,100 new ordinary shares at N3.65 per share. The terms of the offer provided existing shareholders with the right to purchase six new shares for every share they held. The company later expanded the offering to include non-shareholders, further broadening the capital raising opportunity and potentially increasing its effectiveness.
The primary objective of this rights issue was to settle the company’s outstanding US dollar-denominated loan, a significant contributor to the foreign exchange losses. By using the proceeds to eliminate this debt, International Breweries aims to mitigate its exposure to foreign exchange fluctuations and improve its profitability. Additionally, the raised capital was intended to provide working capital support, bolstering the company’s operational capacity and facilitating its growth strategies. This injection of capital was expected to strengthen the company’s financial position and enable it to navigate the volatile economic environment more effectively.
International Breweries, as a part of AB InBev, benefits from the backing and resources of the world’s largest brewer. This relationship provides access to global best practices, technological advancements, and financial support. AB InBev’s acquisition of SABMiller in 2016 brought together three major Nigerian breweries – Intafact Beverages Limited, International Breweries Plc, and Pabod Breweries Limited – under the International Breweries umbrella. This consolidation aimed to create a stronger and more competitive entity in the Nigerian beverage market. As of December 2024, AB InBev Nigeria Holdings BV held a controlling stake of 96.1% in International Breweries, demonstrating its long-term commitment to the Nigerian market. The parent company’s continued support is expected to play a crucial role in the brewery’s efforts to return to profitability and achieve sustainable growth. With the successful execution of the rights issue and the ongoing support of its parent company, International Breweries is optimistic about returning to profitability in 2025, projecting a more stable financial future with reduced exposure to foreign exchange risks.
