Business
Forex losses depress Nigerian Breweries’ profit
The board of directors of Nigerian Breweries has blamed the decline in the company’s net profit to forex losses.
The first half report of Nigerian Breweries for the period ended June 30, 2016 showed that profit after tax declined by 11 per cent in spite of modest increase of four per cent in turnover.
In a statement, the board noted that in the first half of 2016, the company was able to deliver top line growth with revenue increasing by four per cent compared to the first six months of 2015, adding that rising inflation combined with higher inputs costs as a result of scarcity of foreign exchange, led to a flat operating profit compared with the preceding year.
Read also: Nigerian Breweries declares N38bn dividend
The report stated that despite a lower interest cost from the Commercial Paper Programme, profit after tax declined by 11 per cent, mainly due to foreign exchange losses arising from the rates going up in June.
The company declared a revenue of N157.37 billion for the first half of 2016 as against N151.67 billion declared in the corresponding period in 2015. The results show that the results from operating activities of the Company improved by 0.10 per cent from N33.90 billion in the first half of 2015 to N33.94 billion in the corresponding period in 2016.
A further analysis shows that profit before tax (PBT) dipped by 17.64 per cent from N33.99 billion in the period under review in 2015 to N25.52 billion in the same period in 2016 while profit after tax dropped by 11.24 per cent to N19.06 billion in the current period from N21.47 billion in the same period in 2015.
The company stated that although the board expects the operating environment in 2016 to remain challenging for the rest of the year, it remains focused on its twin agenda of cost leadership and market leadership supported by innovation and the board remains positive on the Nigerian market for the medium and long term.
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