Nigeria Breweries Loses N70.6 Billion Quarter 2 Over forex

Nigeria Breweries Plc lost N70.6 billion in Quarter two which ended in

June 30th, 2023 in what was described as an exchange rate loss.

This is according to the information contained in its just published interim report for the first half of the year.

Key highlights 2023 Q2

Net revenue N154 billion +13% YoY
Gross Profit N68.4 billion +21.5% YoY
Operating profit N26.6 billion +119.7% YoY
Net Finance Cost N77 billion +970.8%
Pre-tax lossN50.2 billion
Gross margins 44.4% versus 41.3% YoY
Operating profit margins 17.3% versus 8.9% YoY
Working capital -N318.6 billion
Retained earnings N35.5 billion versus N80 billion (2023 Q1)
Loss Per Share N4.6

Insights: The losses were a result of the unification of the exchange rate which has led to forex losses upon the revaluation of its dollar-denominated loans.

The company reported a net loss on foreign exchange of N70.6 billion taking the year-to-date exchange rate loss to N85.2 billion.
The losses contributed to a massive N47.7 billion reduction in net assets.
Important to add that the losses did not impact cash as the company still has a healthy cash balance of N34.9 billion.
However, its negative working capital suggests it has to find money to repay its loans when they fall due within a year. It could also restructure the loans.

The current losses are likely to impact full-year profits considering that NB Plc also reported a profit after tax of N13.1 billion last year (2022).
NB has so far reported back-to-back losses in the first two quarters of the year after reporting a loss before tax of N17.4 billion