Nigerian Breweries Plc, the foremost brewer in the country, has explained that the N314 billion revenue it recorded in the 2016 financial year is as a result of its twin agenda of Cost Leadership and Market Leadership supported by Innovation.
Managing Director of the Company, Mr. Nicolaas Vervelde explained to journalists at a media briefing in Lagos on Tuesday, ahead of its Annual General Meeting, that the analysis of the audited results shows that the N314 billion revenue represents a 6.7% growth from the N293 billion it recorded in 2015. The declared total dividend of N3.58 per share is also a 100% earnings pay out.
“When all factors are considered, our results have been positive and creditable over the years. Despite the deterioration in consumer purchasing power, our robust brand portfolio which covers a broad spectrum of consumer needs enabled us to protect revenue and profitability,” he said.
“The operating environment in 2016 was very challenging especially from an input cost, FOREX and purchasing power perspectives. Our volume growth was in the mid-single digit region, coupled with the price increases that we implemented positively impacted our revenue growth, “he added.
Meanwhile the Board of the company has recommended a total dividend of N28, 386, 181, 179 (Twenty Eight Billion, Three Hundred and Eighty Six Million, One Hundred and Eighty One Thousand, One Hundred and Seventy Nine Naira only), for approval at the forthcoming Annual General Meeting which holds on May 3, 2017. The total dividend amounts to N3.58 (three Naira fifty kobo) per ordinary share of fifty kobo each for the 2016 financial year.
It would be recalled that the company had earlier paid an interim dividend of N7.9 billion that is, N1.00 (One Naira only) last year to its shareholders. Thus, the final dividend will be N20. 5 billion that is, N2.58 (Two Naira fifty kobo) per share.
According to Vervelde, the operating environment in 2017 is expected to be similar to 2016, but the company is confident that it is well positioned to adapt to the operating environment as required, and stay committed to delivering a good return on investment to shareholders.
In another development, Nigerian Breweries (NB) Plc. said has signed a Memorandum of Understanding (MoU) with the Ministry of Agriculture to source raw materials locally.
The company said among others said it currently sources about 50 percent of its raw materials locally, but optimistic of achieving its 60 percent target by 2020., adding that local material sourcing will ease FX challenges and contribute to the socioeconomic development of the country.
Speaking at the company’s Pre-AGM media briefing held on Tuesday in Lagos, Mr. Nicolaas Vervelde, NB ‘s Managing Director said Nigerian Breweries was also making progress in the deployment of new hybrid sorghum varieties, and that yields have increased, in line with the firm’s growth projections.
The managing director said the company had embarked on various sorghum value chains to increase its source locally.
Vervelde said the company had been in the sorghum value chain since 1998, noting that it was also investing in research and development in regard to sorghum seeds and that the company at the moment had two sorghum plants in Kaduna and Aba to improve local production.
He said the company was making progress with its partners – International Fertilizer development Centre (IFDC) and Psaltery International, a local processing company, on value extraction from cassava.
On the company’s performance during the period under review, he said that 2016 was challenging due to the impact of high inflation, scarcity of foreign exchange and drop in oil price at the international market.
Vervelde said that government revenue in 2016 was under pressure due to crude oil price crash, which led to low purchasing power.
He, however, expressed optimism in the company adapting to policies in the operating environment in order to deliver good return on investment to stakeholders.
“It is anticipated that economic activities will improve in 2017, considering the far reaching fiscal and monetary measures being planned and implemented by the Federal Government.
“It is therefore hoped that with the gradual rise in the price of oil and a steady increase in the volume of oil output, the Naira will be strengthened and forex will be more available for businesses.
“The brewed product market would remain competitive and consumers are expected to continue the down-trading as they seek for more affordable brands,” he said.
Vervelde said that cost leadership and market leadership supported by innovation remained the company’s key strategic pillars.
He said that the company had developed a set of competing portfolio to address the needs of its diverse consumer base.
The managing director, however, decried the low per capita consumption of beer in the country, revealing that though Nigeria has a large population of over 180 million people, but only consumes 11-litres per person, while other countries with large population have far higher consumption per capita.
He said the performance of the beer industry in the last year had been a reflection of the economy, noting that the industry had been undergoing slow growth mainly due to recession and low consumer purchasing power.
The company’s results, for the financial year ended Dec. 31, 2016, recorded a turnover of N314 billion against N294 billion posted in 2015, an increase of seven percent.
Its profit after tax stood at N28.4 billion, lower than N38.1 billion achieved in the comparative period of 2015.
The company’s operating profit dropped to N53 billion compared with N62.2 billion in 2015, a decrease of 15 percent.