Nigerian Breweries blames Emefiele’s CBN policy for N10.71bn loss

The operation of Nigerian Breweries was negatively impacted by the Naira redesign policy of the Central Bank of Nigeria (CBN) in the first quarter (Q1) of 2023.

Ripples Nigeria had reported that the Naira redesign policy, led by Godwin Emefiele, the CBN governor, was implemented on February 10, 2023, to reduce currency in circulation.

The implementation led to the CBN phasing out the old N200, N500 and N1,000 notes. They were replaced with newly redesigned banknotes, however, the apex bank printed insufficient currencies, resulting in Naira scarcity.

The cash crunch led to many depending on digital channels of payment, however, the electronic payment platforms of commercial banks crashed on several occasions, as the payment channels couldn’t withstand the sudden migration and traffic.

Consequently, State governors filed a lawsuit against the Federal Government to force the CBN to suspend the policy. The Supreme Court ruled on March 3, stating that the policy infringed on the rights of Nigerians and the old Naira notes remained legal till December 31, 2023.

However, the ruling of the Supreme Court couldn’t prevent Nigerian Breweries from bearing the brunt of the policy, as it had already caused much damage to the company’s sales.

According to the financial records for Q1 released on Wednesday, Nigerian Breweries suffered a -10.49 per cent drop in revenue. The firm generated N123.31 billion in turnover for the quarter. This is below the N137.77 billion posted in Q1 2022.

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Also, gross profit fell to N43.88 billion in the review period, from N62.45 billion recorded in the first quarter of last year, indicating a –29.7 per cent decline.

This led to Nigerian Breweries suffering N10.71 billion loss between January to March this year. The company failed to replicate the N13.61 billion profit after tax recorded during the same period in 2022.

Commenting on the disappointing turnover, the Nigerian Breweries board said: “The operating environment during the period under review was very challenging for businesses.

“The impact of the cash crunch which led to a near collapse of payment channels as well as the security and safety uncertainties associated with the general elections, created disruptions in the economy.

“These were in addition to the continuing headwinds of inflationary pressure with its impact on purchasing power, input cost, and operating expenses.

“The total brewed product market suffered a double-digit (mid-twenties) volume decline versus the same period in 2022. We were able to largely mitigate the volume decline impact on our Revenue due to our appropriate pricing strategy.

“Our Operating Profit was further impacted by a one-off reorganisation cost with a view to refreshing and restructuring the business to cope with current challenges for a sustainable future.”

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