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Nigerian Breweries to Raise N20bn Through Commercial Paper

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Nigerian Breweries Plc has launched a new phase of its N100 billion commercial paper programme, allowing the firm to raise N20 billion from investors.

The capital raise comes in three series of varying maturities: the first has a tenor of 91 days, the second 120 days and the third 154 days.

Typically unsecured, commercial papers provide corporations an opportunity to borrow from investors to meet short-term financial obligations at a fixed interest rate.

Nigerian Breweries said the debt will cater for its “short-term funding needs.”

“The CP Programme continues to provide the opportunity for non-equity investors to invest in the company, support the company’s cost management initiatives and serve as an additional source of funding for the company,” it added.

In December, the brewer announced a proposal to issue about 2.1 billion ordinary shares to reward stockholders in the proportion of 1 new share for every 4 currently held.

It hopes to achieve that by setting aside over N1 billion from the share premium account, which had a balance of N77.5 billion as of the end of 2021.

Nigerian Breweries announced a revenue of N393.336 billion for the third quarter (nine months) ended 30 September 2022. The figure represents an increase of 27.2 percent from N309.22 billion recorded in the corresponding period in 2021.

In a statement signed by the Company Secretary/Legal Director, Nigerian Breweries Plc, Uaboi Agbebaku, revenue growth in the quarter driven by pricing was however offset by higher input cost arising from increased rate of inflation and higher energy costs.

Analysis of the results revealed that cost of sales rose significantly by 20.2% from N198.75 billion in 2021 to N238.92 billion during the period under review in 2022. Marketing, Distribution, and Administration expenses also grew by 40.1% from N86.33 billion in 2021 to N120.95 billion in 2022.

Apart from volume and cost challenges which affected business performance negatively in Q3, 2022, there was increased pressure on consumer disposable income as well as heavy rains and flooding. Nevertheless, the Company performed relatively well in the period led by a strong premium portfolio of Heineken, Tiger and Desperados.

Despite the volume and cost challenges in the third quarter, the strong performance recorded in the first half of the year ensured that Operating Profit grew by 44% while Profit after Tax went up 80%. The Board has therefore announced an interim dividend of N3.29 billion payable to shareholders at 40kobo each per ordinary share of 50k.

While being cautious about the development of input costs and consumer demand in the remaining period of 2022, the statement assured stakeholders that the Company is well positioned to take advantage of any upswing in the market and maintain its leadership position.