NIGERIA - Guinness Nigeria and Nigerian Breweries, two of Nigeria's leading beverage giants, have announced substantial revenue growth for the third quarter of 2024. 

Yet, both companies are contending with the challenges posed by surging costs, currency depreciation, and inflation in Africa’s largest economy.

Under its new ownership by Tolaram, Guinness Nigeria revealed a revenue increase of 111% year-over-year, rising from ₦59.5 billion (US$36.2 million) to ₦125.9 billion (US$76.6 million) for the quarter ending September 30, 2024. 

Despite this impressive growth, cost pressures weighed heavily on its profits. The company's cost of sales jumped by 170%, spurred by both increased production volumes and the elevated costs of raw materials and utilities driven by the naira's depreciation. 

As a result, Guinness Nigeria reported a loss before tax of ₦16 billion (US$9.7 million), which was subsequently reduced to ₦12.1 billion (US$7.4 million) after deferrals and tax adjustments.

Meanwhile, Nigerian Breweries, a market leader in Nigeria’s beer sector and majority-owned by Heineken, recorded a 75% revenue growth for the nine months ending September 2024, compared to the same period in 2023. 

Gross profit grew by 36%, moving from ₦152 billion (US$92.5 million) to ₦207 billion (US$126.0 million). 

However, the company's cost of goods sold nearly doubled, reaching ₦495 billion (US$301.2 million) compared to ₦249 billion (US$151.5 million) the previous year. 

Operating expenses also soared, with marketing, distribution, and administration expenses rising by 45%, reflecting the compounded pressures of currency depreciation and high inflation.

In light of these financial strains, Nigerian Breweries has turned to capital markets for support. The Securities and Exchange Commission approved an extension of Nigerian Breweries’ ₦599.1 billion (US$364.6 million) rights issue in October, aimed at reducing the company’s foreign exchange exposure and shoring up its balance sheet. 

CEO Hans Essaadi has highlighted the impact of foreign exchange losses and high borrowing costs, noting that the rights issue is essential for dealing with the economic headwinds.