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The Nigerian Breweries have pointed accusing fingers to the Naira redesign policy of the Central Bank of Nigeria (CBN) having lost about N10.71bn in the first quarter (Q1) of 2023.
Recall that the Naira redesign policy led by the CBN governor, Godwin Emefiele, was implemented on February 10, 2023, to reduce the currency in circulation.
The implementation led to the CBN taking out the old N200, N500 and N1,000 notes. They were replaced with newly redesigned banknotes,
However, the apex bank printed insufficient currencies, which led to Naira scarcity.
The Naira scarcity caused so many to depend on digital channels of payment.
The electronic payment platforms of commercial banks crashed on several occasions and became unnecessarily slow and faulty as the payment channels couldn’t withstand the sudden migration and traffic.
Also, 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 old Naira notes remained legal till December 31, 2023.
Although, the ruling of the Supreme Court couldn’t stop Nigerian Breweries from bearing the brunt of the policy, as it had already caused so much damage to the company’s sales.
The financial records for Q1 was released on Wednesday, and it showed that 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.
Also, gross profit reduced to N43.88 billion in the review period, from N62.45 billion gotten in the first quarter of last year, indicating a –29.7 per cent decline.
This resulted 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.
The Nigerian Breweries board commented on the disappointing revenue to Ripples Nigeria, and said the operating environment during the period under review was very challenging for businesses.
It added that the general elections’ impact on security and safety, along with the impact of the cash crunch, which nearly caused the collapse of payment channels, caused economic disruptions.
Also, these were on top of the ongoing challenges brought on by inflationary pressure, which affected operating costs, input costs, and purchasing power.
Compared to the same period in 2022, the market for all brewed products experienced a double-digit (mid-twenties) volume decline. With the help of our sensible pricing strategy, we were able to significantly reduce the impact of the volume decline on our revenue.
In sum,Nigeria brewery board said “A one-time reorganization cost with a view to refreshing and restructuring the business to cope with current challenges for a sustainable future” had an additional negative impact on operating profit.
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