NB Plc to consolidate earnings with local raw materials sourcing, innovation

Having expanded its operations with a merger with Consolidated Breweries Plc, Nigerian Breweries Plc has unfolded plans to consolidate its earnings and profitability through improved local raw materials sourcing and innovative products.

According to company, the combined portfolio seeks to achieve its 60 per cent local raw materials sourcing target by the end of 2018 by exploring cassava and sorghum value-chains.

The Managing Director, Nigerian Breweries Plc, Nicolaas Vervelde, at the company’s pre-yearly general meeting in Lagos on Tuesday, said the company, which presently sources at least 45 per cent of its raw materials locally, hopes to achieve its 60 per cent target by 2018.

Already, the company, Psaltry International Company Limited, a Nigerian cassava processing company and the International Fertilizer Development Centre (IFDC), through its “Towards Sustainable Clusters in Agribusiness through Learning in Entrepreneurship project (2SCALE)”, had earlier signed a partnership agreement to optimise the cassava value chain in Nigeria and improve agribusiness for Nigerian smallholder farmers.The Partnership Agreement is collaboration between the parties to improve outputs of smallholder farmers and consequently support economic development as well as promote inclusive growth in Africa.

The partnership will enhance farmers’ productivity and increase supply of high-quality cassava roots to Psaltry who will, in turn, provide industrial quality cassava starch for Nigerian Breweries to extract maltose syrup for use in the brewing process.

With a combined portfolio, Vervelde explained that the merger and operational integration with Consolidated Breweries Plc had commenced in January 2015 and would be concluded very soon.

He said that cross selling of the company’s combined portfolio had started with one head office and one management team.

The managing director said that the company had integrated its brand portfolio and eliminated duplication of activities.

He said that the company embarked on the merger to ensure operational efficiencies from supply and distribution networks, improve economies of scale and value creation through increased competitiveness.
“The merger process is progressing well with focus on maintaining leadership and outperforming competition,” Vervelde said.

He said that the impact of the merger would be evident in the company’s operations in the next couple of weeks.

On the company’s 2014 result, Vervelde said that the falling oil price, devaluation of the Naira and low dispensable income, affected operational performance in the year under review.

“2014 was a highly competitive year with 18 lager brands in the market, with inequalities in income distribution and limited purchasing power,” he said.

Vervelde said that the company was committed to cost leadership, to maintain its leadership position in the industry.

He said that the company embarked on cost reduction strategies such as logistic costs and cost of raw materials, to reduce the impact of unfriendly operating environment on its operational performance.

Vervelde also expressed fears that the nation’s economic challenges would likely persist throughout 2015, stressing, however, that the long-term fundamentals of the Nigerian market remained positive.

The company in 2014 posted a revenue of N266.37 billion, compared with the N268.61 billion achieved in the corresponding period of 2013.

Profit-before-tax dropped to N61.46 billion from N62.24 billion posted in 2013, while profit-after-tax stood at N42.52 billion, against the N43.08 billion in 2013.

The company declared N37.21 billion dividend or N4.75 per share, compared with the N34.03 billion or N4.50 paid in 2013.