Nigeria’s biggest beer maker, Nigerian Breweries, plunged deeper into loss in the nine months to September compared to the same period of last year as the brewer’s net loss soared by more than 161 per cent according to its earnings report issued Wednesday.

A mix of factors ranging from the country’s galloping inflation, exchange rate volatility and accelerating input costs drove the less impressive performance.

“The increase in Net Loss was again significantly influenced by FX loss due to the devaluation of the Naira and high borrowing costs arising from higher interest rates,” the company said in a separate statement.

Net revenue was up by 76.9 per cent at N710.9 billion. Cost of sales more than doubled to N500.1 billion for Nigerian Breweries, 40 per cent of whose input costs comes from imports, making it particularly vulnerable to exchange rate volatility.

Selling and distribution expenses rose to N143.1 billion from N101.6 billion a year ago, with distribution costs jumping by 63.2 per cent.

With the monetary authority in Nigeria weakening the naira by 31 per cent in January, the beverage manufacturer incurred N160.5 billion in net loss on foreign exchange transactions compared to N86.8 billion a year earlier.

Pre-tax loss expanded 159.7 per cent to N203 billion, while after-tax loss scaled up to N149.5 billion from N57.2 billion.

The local unit of Netherlands-based Heineken NV said early last month in response to a PREMIUM TIMES email query that it was looking to its parent company to fully take its allotment from its just concluded rights issue.

The proceeds of the share offering, which targeted N600 billion in fresh capital from existing shareholders, would help clear the foreign currency overdue which threw shareholders fund into negative at half year after liabilities outran assets, Nigerian Breweries said at the time.

“The rights issue will allow the company to strengthen its balance sheet and significantly reduce FX exposure. This is part of the business recovery plan aimed at accelerating a reinstatement of the company’s profitability,” the brewer said in the statement.

Its financial position has much deteriorated in the quarter to September, with shareholders’ fund surging more than fourfold to -N84.5 billion from -N19.5 billion three months earlier.

Nigerian Breweries’ shares have depreciated by more than 22 per cent this year, underperforming the Nigerian Exchange’s Consumer Goods Index, which has returned more than 40 per cent.

The manufacturer of top beverage brands including Gulder, Star Lager, Martina, Amsterdam Malta and Fayrouz this year acquired a majority stake in Distell Wines and Spirits Nigeria Limited, adding spirits, wines and flavoured liquors to its broad range of products.

PT