Nigeria: Nigerian Breweries to Close Two of Its Nine Plants

Nigerian Breweries, the Nigerian arm of Heineken Brouwerijen B.V., announced on Tuesday plans for a comprehensive restructuring of its operations in response to a range of financial and operational challenges, as outlined in a note to the Nigerian Exchange Limited. As part of this restructuring, the company will temporarily close two of its nine plants and adjust capacities in the remaining seven.

In order to address the problems in the country, Heineken already announced in March to sell its stake in Champion Breweries, a Nigerian brewery, just over two years after acquiring a controlling interest in the company (
inside.beer, 13.10.2021)

Last year, Nigerian Breweries reported a significant net loss of NGN 153.3 billion (USD 132m) from foreign exchange transactions, marking its largest loss in its 77-year history. (inside.beer, 20.2.2024) Importation accounts for nearly half of the company’s input costs, including expenditure on raw materials.

The net loss of NGN 106.3 billion (USD 91.5m) in 2023 was attributed to various economic factors such as increased operational costs, ongoing pressure on consumer spending, rising inflation rates, and foreign exchange volatility.

The company has informed labor groups, including the National Union of Food, Beverage and Tobacco Employees and the Food Beverage and Tobacco Senior Staff Association, about the temporary closure of the two plants. Discussions regarding potential job cuts, among other operational efficiency measures, have already commenced with the unions.

Hans Essaadi, the managing director of the company, expressed regret over the impact of the plant closures on employees and assured them of the company’s commitment to minimizing the impact and providing support and severance packages to affected staff.

To address its financial challenges, Nigerian Breweries is considering a rights issue to raise fresh capital, allowing management to obtain funds from existing shareholders in exchange for new shares.

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