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Forex scarcity: Nigerian Breweries offers foreign investors option to reinvest dividends in local shares

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By Oludare Mayowa

The subject of challenges being faced by businesses in Nigeria in sourcing foreign exchange was a talking point on Thursday at the Nigerian Breweries Plc pre-Annual General Meeting in Lagos as the company creates a pathway for its foreign investors to reinvest their dividends back in the firm’s shares.

According to the company secretary, Uaboi Agbebaku, the option for interested shareholders to convert their dividends to shares would enable the company to retain part of its earnings and also reduce its borrowing.

Aside from the reason for cutting back on borrowing and retaining a portion of the earnings, the company said sourcing foreign exchange to procure essential inputs has continued to pose serious challenges to the operations of the company.

Agbebaku said it has been difficult for foreign investors in the company to procure foreign exchange to enable them to repatriate their dividends back to their home countries.

He said rather than such investors keeping their dividends in their naira accounts and allowing inflation and currency devaluation to erode their gains, such investors should reinvest such money back in the company’s shares.

Nigerian Breweries Plc has proposed to payout a total of N12.92 billion from its profits to shareholders as dividends from its 2021 profits, consisting of N3.23 billion interim dividends and N9.69 billion final dividends.

The company is recommending that the shareholders approved a proposal that will qualify them to receive new ordinary shares in the company instead of receiving the final dividends in cash.

The company posted 29.7 per cent growth in its revenue at the end of December 2021 to N437.19 billion compared with N337 billion posted in the previous financial year.

Profit before tax also rose 104.4 per cent to N23.93 billion at the end of the last financial year compared with N11.71 billion posted in 2020.

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On his part, the chief executive of the company, Hans Essaadi projected that the volatility in the foreign exchange market will continue beyond 2022.

According to him, the increasing difficulty in accessing foreign exchange, rising inflation and currency devaluation continue to impact the company’s profitability.

He also said that the ongoing war between Russia and Ukraine has impacted the importations of some input with prices of such items rising daily.

Essadi, who lamented the rising cost of living in the country, said rising inflation is impacting the disposable income of consumers.

“Increasing cost of production, the inability to procure foreign exchange to allow us to invest in capacity and expansion,” he said continue to pose some challenges to the company’s growth.

However, he said despite all the challenges, the company believes that it is the right place and hope the next 75 years will see improvement in the company’s growth.

“We believe we are in a right place to grow and develop,” Essadi said.

The company’s corporate Affairs director, Sade Morgan said Nigerian Breweries in its efforts to strengthen environmental conservation and protection has been able to reduce “our carbon footprint, promoting circularity and effectively managing our watersheds.”

Morgan said the company has reduced it energy consumption by 11.35 per cent through the launch of a 663.6kwp solar plant to power its Ibadan Brewery.

“This solar plant positioned us as the first brewery in Nigeria whose products are ‘brewed by the sun,” and will supply approximately 800 MWh of solar power to the brewery annually while reducing C02 emissions by over 10,000 tonnes throughout the lifespan of the plant.”

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