Harsh Operating Environment: Nigerian Breweries To Close 2 Production Plants

Nigerian Breweries Plc has indicated plans for a company-wide reorganisation which include the temporary suspension of operations in two of its nine breweries.

The company said this move is part of a company-wide reorganisation as part of its strategic recovery plan  aimed at securing a resilient and sustainable future for its stakeholders.

The Nigerian Breweries’ Business Recovery Plan includes a rights issue and a company-wide reorganisation exercise which includes temporary suspension of two of its nine breweries and an optimisation of production capacity in the other seven breweries, some of which have received significant capital investment in recent years.

These measures include relocating and redistributing employees to the remaining seven breweries and offering support and severance packages to those that become unavoidably affected.

This move is essential to improve the company’s operational efficiency, financial stability and enable a return of the business to profitability, in the face of the persistently challenging business environment.

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In letters signed by the company’s human resource director, Grace Omo-Lamai, and addressed to the leadership of the National Union of Food, Beverage & Tobacco Employees (NUFBTE) and the Food Beverage and Tobacco Senior Staff Association (FOBTOB), the company 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 two of its nine breweries.

As a result, and in accordance with labour requirements, the company invited the unions to discussions on the implications of the proposed measures.

Recall that the company recently notified the Nigerian Exchange Group (NGX) of its plan to raise capital of up to N600 billion by way of a rights issue, as a means of restoring the company’s balance sheet to a healthy position following the net finance expenses of N189 billion recorded in 2023 driven mainly by a foreign exchange loss of N153 billion resulting from the devaluation of the naira.

Speaking on these developments, managing director/CEO Nigerian Breweries, Hans Essaadi described the business recovery plan as strategic and vital for business continuity.

According to him, “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.

“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 our people as much as possible by exhausting all options available including the relocation and redistribution of employees to our other seven breweries; and providing strong support and severance packages to all those that become unavoidably affected.”

Essaadi added that, “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.”