After watching their operating profit plummet by 41.2 percent as a result of the introduction of the new excise duties, Nigerian Breweries Plc., has stated that an increase in prices of some of their products was on the cards as the brewers look to cushion the effect of the duties on their 2019 revenue.
Speaking at the pre-annual general meeting media briefing, Jordi Borrut Bel, managing director of the company, said the 2018 financials showed both top and bottom line decline reflecting the challenges posed by the excise duties changes during the course of the year under review, which the company thought it best not to transfer to the consumers.
Bel said, “In 2018 it was difficult to pass on the extra cost to consumers in view of the weak purchasing power, we actually tried it in June last year, but after closely watching the reaction of consumers, we quickly reverted back to the old prices in July, but seeing the Q1 2019 results, our volume sales increased, which means we have the consumer confidence.”
“Last year, in our bid to drive efficiency, we went through a painful period trying to cut cost, we are also aware of the plight of consumers, we are also aware that our market has become even more competitive, but our saving grace is we have a very wide range of products, so we will look to capitalise on the quality of our products,”
In 2018, the federal government effected a change in the country’s excise duty system, duties were raised to N30 per litre in June 2018. The also has in store another wave of excise duties increase on beer in 2019, which will see rates rise from N30 per litre to N35 per litre. As a result of the challenging operating environment, in Q3 2018, Nigerian Breweries recorded a loss
For the full year 2018 result, the brewers recorded a total turnover of N324 billion compared to N345 billion recorded in 2017. Results from operating activities went down from N57 billion to N37 billion, but despite the challenging operating environment, Nigerian Breweries recorded a profit after tax of N19 billion, although lower than the N33 billion recorded in 2017