Nigerian Breweries Profit Falls as FX Shortage Adds to Costs

LAGOS (Capital Markets in Africa) – Nigerian Breweries Plc, the local unit of Heineken NV, said full-year profit declined 26 percent as a shortage of foreign exchange hampered the import of raw materials and increased the cost of doing business.

Net income declined to 28.4 billion naira ($90 million) fin 2016 from 38 billion naira the previous year, the Lagos-based company said in a statement published on the Nigerian Stock Exchange’s website on Monday. Cost of sales rose by 20 percent to 178 billion naira while revenue increased by 7 percent.

Companies in Africa’s most populous nation are struggling to get dollars to pay for imports and services after a decline in the price of oil reduced government revenue. That’s made it more expensive for Nigerian Breweries to make its flagship Star lager and Legend Extra Stout. At the same time, drinkers are under pressure from inflation that climbed for a 15th consecutive month in January to 18.7 percent.

Guinness Nigeria Plc, the country’s second-biggest brewer, said last month it made a loss of 4.67 billion naira for the six months through December, its biggest in at least 30 years, as cost rose by more than a half.

Nigerian breweries shares rose 4.2 percent to 119.81 naira at the close in Lagos, the biggest jump of the year. The shares are down 19 percent this year, compared with a 6 percent decline by the Nigerian Stock Exchange All-Share Index.