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The pioneer and largest brewing company in Nigeria, the Nigerian Breweries has said it will undertake a company-wide reorganization of its operations in response to a host of financial and operational difficulties.
The company made this known on Tuesday, April 16, in a note to the Nigerian Exchange Limited.
Operational concerns include a record foreign exchange loss in 2023, which has left the company with no option but to close down two of its nine plants.
The choice became necessary to reposition the Nigerian subsidiary of Heineken Brouwerijen B.V. for a sustainable future favourable to stakeholders.
Nearly half of the company’s input costs, which includes the cash spent on raw materials, is contributed by importation.
According to the beer-making company, the net loss of N106.3 billion posted in 2023 resulted from a combination of challenging economic factors ranging from heightened operational costs, continued pressure on consumer disposable income, escalating inflation rates, foreign exchange volatility, amongst others.
Labour groups including the National Union of Food, Beverage and Tobacco Employees as well as the Food Beverage and Tobacco Senior Staff Association have been notified of the move to halt operations temporarily at the two plants.
Job cuts are a strong possibility among the operational efficiency measures to be adopted by the company in the days ahead, with talks centering on the implications of that move already arranged with the two unions.
“We recognize and regret the impact that the suspension of brewery operations in the two affected locations may have on our employees,” said Hans Essaadi, the Managing Director of the company.
“We are committed to limiting the impact on people as far as possible and providing strong support and severance packages to all affected.”
A rights issue is under consideration to enable the management source cash from current shareholders in exchange for new shares. This is aimed at raising fresh capital that could help restore life to the cash-strapped brewer.
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