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Job cuts are a strong possibility among the “operational efficiency measures” to be adopted by the company in the days ahead
Beer-maker Nigerian Breweries will undertake a company-wide rejig of its operations in response to a host of financial and operational difficulties, the company said Tuesday in a note to the Nigerian Exchange Limited.
The operational concerns include a record foreign exchange loss last year, which is leaving it with no option but to close down two of its nine plants.
The hard choice becomes necessary to reposition the Nigerian subsidiary of Heineken Brouwerijen B.V. for a sustainable future favourable to stakeholders.
A net loss on foreign exchange transactions summing up to N153.3 billion set Nigerian Breweries up for its biggest loss after tax last year since it began operations 77 years ago in the country.
Nearly half of the company’s input costs, which includes the cash spent on raw materials, is contributed by importation.
The net loss of N106.3 billion posted in 2023 resulted from “a combination of challenging economic factors ranging from heightened operational costs, continued pressure on consumer disposable income, escalating inflation rates, FX volatility, amongst others,” the company said.
Labour groups including National Union of Food, Beverage and Tobacco Employees as well as the Food Beverage and Tobacco Senior Staff Association have been notified of the move to halt operations temporarily at the two plants, according to the document.
Job cuts are a strong possibility among the “operational efficiency measures” to be adopted by the company in the days ahead, with talks centring on the implications of that move already arranged with the two unions.
“We recognize and regret the impact that the suspension of brewery operations in the two affected locations may have on our employees,” said Hans Essaadi, the managing director of the company.
“We are committed to limiting the impact on people as far as possible and providing strong support and severance packages to all affected.”
Towards raising fresh capital that could help restore life to the cash-strapped brewer, a rights issue is under consideration to enable the management source cash from current shareholders in exchange for new shares.
Attention will shift to the remaining seven manufacturing plants with a view to putting their production capacity to greater use.
Nigerian Breweries this year acquired four-fifths of the ownership of Lagos-based Distell Wines and Spirits Limited in a strategic expansion move into the wines and spirits market.
