Rating Release
Agusto & Co. affirms the ‘A+’ rating assigned to Nigerian Breweries PLC, with a stable outlook
The rating expires on 30 June 2025.
Agusto & Co. hereby affirms the “A+” rating assigned to Nigerian Breweries PLC (“Nigerian Breweries”, “NBPLC” or “the Company”). The rating affirmation is based on the financial strength of the parent company and the sustained funding support it continues to provide the business amid severe macro-economic headwinds, coupled with NBPLC’s strong liquidity profile and continuous market leadership. The rating also considers the ₦600 billion right issue programme scheduled for completion in October 2024, the proceeds of which will be applied to convert all inter-company foreign currency (FCY) obligations to equity. In our view, the proposed debt-equity swap will moderate the Company’s overall exposure to currency risk and restore its depleted equity reserves. Notwithstanding, the rating is constrained by NBPLC’s weak profitability, deficient working capital and high leverage position attributable to muted earnings and huge foreign exchange (FX) losses in the aftermath of the floatation of the Naira on 14 June 2023. Despite the harsh business environment, Agusto & Co. notes that the Company’s core operation remains profitable, upheld by the positive impact of the deepened local input sourcing, good ability to re-price and the reduction of its cost base via the consolidation of its operational capacity.
Nigerian Breweries PLC, the foremost brewing company in Nigeria, is 56.59% owned by the second largest brewer in the world – Heineken N.V. rated “Bbb+” by Standard and Poor’s. This rating is higher than the rating of the Nigerian Sovereign. In line with its “Beyond Beer” vision, the Company added wines, cider and spirits to its product portfolio after acquiring 80% stakes in Distell Wines and Spirits Nigeria Limited (Distell Nigeria) to become a total beverage business. NBPLC remains a key part of the Parent company’s plan to capture value within Africa’s largest consumer market and thus enjoys sustained group support. The Company has an extensive supply chain network spread across the country, which underlines NBPLC’s strong transaction capture ability.