Nigeria: Nigerian brewers see 152% surge in finance costs due to naira devaluation

Nigerian beer makers have recorded a 152% surge in finance cost to N117.96 billion in the first half of 2023 due to the naira devaluation, BusinessDay NG reported on September 29.

The beer makers saw finance costs rise to N117.96 billion in H1 2023 from N46.81 billion in the corresponding period of 2023.

Guinness Nigeria recorded the highest increase of 2401.9 percent growth, Nigerian Breweries followed with a record of 260.8 percent growth, International Breweries reported 127.9 percent year-on-year growth while Champion Breweries recorded a 12.7 percent increase.

“The biggest problem for a lot of consumer goods firms are FX losses because a lot of them have USD liabilities to import raw materials on credit and as they have their debt as books they need to convert it to naira,” Ayorinde Akinloye, an investor relations analyst at Seplat Energy Plc, said.

He told BusinessDay that brewers had higher cost problems, an inflation environment, the impact of raw materials cost, price of goods, and other raw materials that they use have an impact on their cost and their profit.

“FX pressure is the biggest impact on their performance. Inflation and FX are the two problems because as inflation affects them they are also increasing prices,” he said.