Nigeria: Heineken Suffers Record Loss Due to Currency Depreciation

Heineken's Nigerian subsidiary, Nigerian Breweries Plc, is grappling with its most challenging phase in history, revealing a record high net deficit of NGN 106 billion (USD 91 million) in 2023. The economic instability in Nigeria, the continent's most densely populated country, has severely impacted multinational corporations, with Nigerian Breweries Plc bearing the brunt of the turmoil. The downturn, attributed to factors like cash scarcity, fuel subsidy removal, naira devaluation, and soaring inflation rates, underscores the dire situation faced by the company.

During an investor call on February 19, Hans Essaadi, CEO of Nigerian Breweries Plc, highlighted the unprecedented challenges encountered by the firm. "We witnessed a significant decline in the mainstream lager market due to Nigerian consumers no longer being able to afford a Goldberg after a hard day’s work," he noted.

The losses stemming from the devaluation of the country’s local currency, the naira, have significantly contributed to the company's financial distress. The naira's depreciation, losing about 70% of its value against the dollar since June, has exacerbated inflation, reaching an almost three-decade high of 29.9% in January.

Despite a 9% increase in revenues to NGN 599.6 billion (USD516m), Nigerian Breweries Plc reported a net loss of NGN 106 billion (USD 91m) for 2023, compared to a profit of NGN 13.18 billion (USD 11.3m) the previous year. The loss is attributed to various economic challenges, including cash scarcity, high inflation, fuel subsidy removal, and naira devaluation.

In response to these difficulties, Nigerian Breweries Plc is committed to weathering the storm, with plans to source more raw materials locally to mitigate foreign exchange challenges. Additionally, the company introduced higher product prices in February to alleviate some of the financial strain. Essaadi emphasized the company's confidence in its portfolio, processes, and people to navigate through these challenging times and emerge stronger in the long run.


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