By Stanley Onyeka, Lagos
Nigerian Breweries Plc says it will shut down two of its nine manufacturing plants in Nigeria due to the harsh economic situation in the country.
Although the company did not identify the two plants, but sources disclose they are located in Kaduna and Imo states.
Specifically, processes were massively impacted by record foreign exchange (FX) losses totalling over N153.3 billion last year, the highest in its 77 years of operations in Nigeria.
Accordingly, the management had to act to help it reposition the Nigerian subsidiary of Heineken Brouwerijen B.V. for a sustainable future favourable to stakeholders.
In a filing to the Nigerian Exchange (NGX) Limited signed by its Corporate Affairs Director, Sade Morgan, on Tuesday, the company said it recognised how the closure of the two plants would affect workers in the affected locations.
It equally expressed its commitment to reducing the effect of the situation by providing severance packages to the affected employees.
Nigeria Breweries Managing Director, Hans Essaadi, was quoted as saying: “We recognise and regret the impact that the suspension of brewery operations in the two affected locations may have on our employees.
“We are committed to limiting the impact on people as far as possible and providing strong support and severance packages to all affected.”
The beer-maker also noted that nearly half of its input costs, which includes the cash spent on raw materials, is contributed by importation.
A net loss of N106.3 billion posted in 2023, it said, 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.”
Also, the leadership of labour groups, the National Union of Food, Beverage & Tobacco Employees (NUFBTE), and the Food Beverage and Tobacco Senior Staff Association (FOBTOB) have been notified about the development in accordance with labour requirements.
The letters were said to have been conveyed to them through the company’s Human Resource Director, Grace Omo-Lamai, in which informed both Unions that its proposed plan would include operational efficiency measures and a company-wide reorganisation that includes the temporary suspension of operations in those two breweries.
Ms. Morgan, however, assured of its commitment to minimising the impact of the closure on its workforce by exploring all feasible alternatives.
Such alternatives include such measures to include relocating and redistributing the plants’ workers to the other seven breweries, and supporting those that will be unavoidably affected with severance packages.
We are committed to limiting the impact on people as far as possible and providing strong support and severance packages to all affected.
Future plans
While these are on, the brewery giant plans to raise fresh capital that could help restore life to the cash-strapped brewer, a rights issue is equally under consideration to enable the management source cash from current shareholders in exchange for new shares.
Already, it had informed the Exchange of its intension to raise ₦600 billion capital via rights issue to restore the company’s balance sheet to a healthy position following the net finance expenses of N189 billion recorded in 2023 driven mainly by the FX losses.
Mr. Essaadi, had underscored the business recovery plan as strategic and vital for business continuity, saying: “The tough business landscape characterised by double-digit inflation rates, naira devaluation, FX challenges and diminished consumer spend has taken its toll on many businesses, including ours.
“This is why we have taken the decision to further consolidate our business operations for efficient cost management and optimal use of our resources for future sustainable growth.”
Speaking on the impact of the closure on the host communities, he assured that Nigeria Breweries will continue to support them in ways that ensure they continue to feel its presence.
“We remain wholly committed to having a positive impact on our host communities and our consumers; leveraging our strong supply chain footprint; excellent execution of our route to market strategy; and our rich portfolio of brands across the Lager, Stout, Malt, soft drinks, and energy drinks categories; and more recently, Wines and Spirits with the acquisition of Distell,” he added.
