Heineken-backed Nigerian Breweries Plans Plant Shutdowns Amid Financial Challenges



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Nigerian Breweries, majority-owned by Heineken, has outlined a strategy to temporarily suspend production at two of its nine plants following a significant loss of N106 billion ($92.9 million) in 2023, signaling a need to streamline operations and strengthen its financial position.

In a filing with the stock exchange, Nigerian Breweries refrained from specifying which two production sites may face suspension, but indicated a willingness to engage with unions to discuss these plans.

Hans Essaadi, CEO of Nigerian Breweries, acknowledged the potential impact on employees, emphasizing the company’s commitment to mitigating this impact through robust support and severance packages.

In addition to the production adjustments, Nigerian Breweries intends to raise N600 billion through a rights issue. The 2023 loss, a stark contrast to the N13.19 billion profit in 2022, was primarily attributed to escalating operational costs and exchange rate fluctuations, with foreign-exchange losses amounting to N153 billion due to naira devaluation.

The company also aims to optimize operations at its remaining seven breweries to navigate challenging market conditions characterized by high inflation rates, currency devaluation, foreign exchange constraints, and reduced consumer spending.

Essaadi stressed the importance of consolidating operations for efficient cost management and financial stability to restore profitability and secure sustainable growth.

Despite revenue growth to N550.64 billion in 2023, up 8.9% from 2022 driven by favorable pricing, Nigerian Breweries faced increased costs, leading to a marginal decline in gross profit. Operating profit also decreased by 15.1% due to rising input costs and restructuring expenses.

Heineken, facing a decline in group beer volumes by 4.7% in 2023, attributed a significant portion of this decline to markets like Vietnam and Nigeria, where sales volumes fell steeply.

Heineken’s decision to divest its stake in Champion Breweries aligns with a strategy to refocus on its core operations in Nigeria while facilitating Champion’s growth under local market conditions through EnjoyCorp, a local holding company focused on food, beverage, and hospitality brands.

The terms of the transaction were not disclosed, but Heineken highlighted the move as an opportunity to optimize its Nigerian operations while ensuring Champion’s continued development under local ownership.

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