- Naira Depreciation Drives Losses, Yet Strategic Moves Propel Company to Record-Breaking Revenue in 2024
Nigerian Breweries has endured its second consecutive year of record losses, as the company grapples with a devalued naira that has impacted its operations. The brewing giant reported a staggering N144.9 billion in net losses for 2024, marking the largest loss in its history, according to its audited financial results.
Despite these challenges, Nigerian Breweries achieved a major milestone by surpassing N1.1 trillion in revenue, a remarkable 81% increase from the previous year’s N599.6 billion. This growth came despite significant pressures on its bottom line, largely due to the soaring costs of imported raw materials, which now account for nearly half of the company’s input costs.
Surging Costs and Imported Raw Material Impact
The company’s direct production costs rose dramatically, now consuming 70.5% of its turnover, up from 64.5% the year before. The surge in costs highlighted the impact of foreign exchange volatility and the continued devaluation of the naira following the Central Bank of Nigeria’s decision to allow a market-driven currency exchange system in mid-2023.
Foreign exchange losses amounted to N157.6 billion, a 2.8% increase from the previous year. While this represents a serious financial hurdle, analysts are cautiously optimistic that the naira will stabilize in 2025.
Strategic Steps to Overcome Financial Hurdles
Despite these challenges, Nigerian Breweries posted a 51% increase in gross profit, rising from N212.6 billion in 2023 to N320 billion in 2024. Operating profit also surged by 59%, climbing to N70 billion, as the company implemented strategic pricing, market expansion, and cost management initiatives to offset rising input costs.
However, the company’s finance costs ballooned, rising to N252.8 billion, up from N189.2 billion in 2023. Loss before tax also increased by 20%, reaching N182.9 billion.
CEO Hans Essaadi attributed the revenue growth to key business strategies, noting that despite macroeconomic challenges, strong operational performance and cost control measures allowed the company to continue its upward trajectory.
To further mitigate the impact of currency fluctuations, Nigerian Breweries has diversified its operations. In a strategic move, the company acquired an 80% stake in Distell Nigeria, expanding into the production of wines and spirits.
Additionally, a successful Rights Issue has provided much-needed capital, allowing the company to reduce future currency risks. These efforts are already bearing fruit: in the final quarter of 2024, the company achieved an 89% increase in revenue, and a 145% jump in operating profit. Net finance costs plummeted by 75%, marking the company’s return to profitability after two years of losses.
The company’s recovery reflects the success of its ongoing transformation initiatives and its commitment to achieving long-term financial stability.
