Heineken NV’s Nigerian unit is facing the worst downturn in the history of its operations in Africa’s most populous nation, the firm’s chief executive officer said in an investor call Monday.

“It has been unprecedented year for our business in Nigeria,” Hans Essaadi, CEO of Nigerian Breweries Plc told investors in Lagos.

“We saw a significant decline in the mainstream lager market as a result of Nigerian consumers no longer able to afford a Goldberg after a hard day’s work,” he said, adding that the businesses also suffered huge losses because of the naira devaluation, which resulted in a 153 billion naira ($99 million) foreign exchange loss.

The naira has lost about 70% of its value against the dollar since June when the central bank allowed it to trade more freely against the dollar. That’s stoked inflation, which reached an almost three-decade high of 29.9% in January, putting pressure on household incomes in the West African nation where 40% of the population live in extreme poverty.

While the brewer’s revenues rose 9% to 599.6 billion naira, it recorded a net loss of 106 billion naira for 2023, compared with a profit of 13.18 billion a year earlier, according to filing on the Nigerian stock exchange.

It attributed the loss to the cash scarcity that resulted from the nation’s demonetization program that started in the later part of 2022, high double-digit inflation, the removal of fuel subsidies and the devaluation of the naira, which was exacerbated by a foreign exchange scarcity.

The firm expects that the pressure on its operations will continue this year but long-term market fundamentals are still positive, it said. Nigeria’s largest brewer plans to source more raw materials locally to mitigate foreign exchange challenges, even as it introduced higher product prices from Feb. 19.

“Nigerian Breweries is very much committed to weathering the storm that we’re in the middle of,” Essaadi said. “We strongly believe we have the right portfolio, and the right process and the right people in place to continue to win in this market,” he said.

Bloomberg