Nigerian Breweries to hike prices, ahead of excise duty rise, amidst harsh environment — Nigerian Pilot News
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Nigerian Breweries to hike prices, ahead of excise duty rise, amidst harsh environment

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TIRED of silently absorbing the Federal Government’s excise duty on alcoholic beverages alone, management of Heineken BV subsidiary- Nigerian Breweries Plc, says it plans to raise the prices of its products to grow revenue, profit and subsequently keep up with dividend payment for shareholders.

Addressing a pre-Annual General Meeting press briefing in Lagos on Tuesday, the company’s management, led by Jordi Borrut Bel, said with excise duty billed to increase again next month (June 2019), “we need to increase prices to compensate for inflation pressure and the impact of the excise tax.”

He assured that the increase would not be across board, even as there would always be affordable products in its bouquet that cater to the need of every segment of the Nigerian society notwithstanding the planned hike. NB Plc parades a bouquet of 19 products after some of them had been rested for relaunch at a later date.

NB Plc’s revenue dropped by 4.25% from N365.789bn in 2017 to N350.226bn last year, in what was blamed on the drop in disposable income of Nigerians, while excise duty expense rose by 21.42% to N25.837bn from N21.27bn.

Cost of sales fell 1.76% from N201.634bn to N197.484bn, bringing gross profit to N126.903bn, down by 11.56% from N143.492bn in 2017. Net profit for the year, therefore, dropped by 41.2% from N33.009bn in 2017 to N19.401bn, following which the directors will propose a final dividend per share of N1.83 for approval by shareholders at next week’s AGM, compared to N3.13 in the preceding year.

Commenting further on the result, Bel noted that the company’s cost did not increase at the double-digit growth rate recorded by the country in the year under review, duty partly to the increased flexibility of its nine brewery and malting plants across the country to produce more brands.

The company, last year, increased prices of its product owing to the excise duty, but reversed it after opting to absorb the additional cost.

In what may be the decision not to continue bearing the burden alone, the MD/CEO said: “We want to increase our revenue, the only way to remain in business is to increase top-line.”

While management can continue to put some segments of operating costs in check to a certain extent to remain profitable, amidst the harsh operating environment and the effect of double-digit inflation which is penalizing businesses, “the ultimate is to raise revenue.”

Despite the country’s negative per capita income last year, he assured that the company is here for the long haul with Nigeria’s population dynamics and interesting market presenting a huge potential for economic growth, especially as it is full of opportunities.

Bel assured also that the first quarter 2019 financials already show that the management’s strategy is working, even as the company continues to work with local farmers and vendors to develop local sourcing of raw materials. The company’s local content is currently at 57%, minus water, which also locally sourced.

The biggest of which is sorghum being the biggest local ingredient, it is partnering with research institutions for higher yield sorghum for the farmers, followed by packaging materials.

On the company’s share price on the Nigerian Stock Exchange (NSE), Bel urged investors to continue taking a long-term view, assuring that NB has all the potentials for continued growth. “It is not the time to sell… confidence in the market will drive the share price (of NB Plc) up,” he stressed

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