Nigerian Breweries banks on internal transformation to cut down costs

NIGERIA – Nigerian Breweries (NB) Plc says the internal transformation process carried out in 2018 with a high one–off financial cost impact is expected to bring about cost savings impact in 2019.

The company listed the transformation processes as including aggressively pursuing the elimination of bad costs thereby freeing up money to be reinvented for business growth.

The process will also entail a robust sales and distribution system that will drive brand penetration and profitability as well as a balanced product portfolio in all categories the company operates under.

The brewing giant also added that it is committed in increasing local sourcing of raw material for production as a measure design to further reduce cost.

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“In line with objective of being an agile organization, a refreshed and reorganization exercise was carried out in 2018 with a high one-off financial cost impact but with cost savings impact expected in the course of 2019.”

 “During the year under review, we undertook a review of our internal processes and ways of working through a simplification project.

“Following from that project, we commenced a transformation process that is aimed at increasing our agility as an organization thereby helping us to respond faster to changing market dynamics,” said Kolawole Jamodu, the company’s chairman, Board of Directors.

During the full year 2018 report, the company recorded a turnover of US$896.36 million compared to US$954.46 million in 2017 while operating profits declined from US$157.69 million to US$102.36 million.

The company attributed the decline to higher Excise Duties and other operating costs.

However, the Federal Government has promised to review the new rate increase as it impacts businesses in the sector.

According to a Beverage News report, the beverage industry is also set to experience another wave of rate increase which will lead to rate increase from N30 per litre introduced in 2018 to N35 per litre in 2019.

According to Jordi Borrut Bel, the company’s Managing Director, other challenges the industry faced includes double digit inflation as well as a difficult macroeconomic environment, which he said is penalizing the business community.

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Despite the Nigerian economy presents challenges, Borrut has assured stakeholders of a positive return on investment in 2019 highlighting that the company remains committed to winning with Nigeria.

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