The copyright of this document is reserved by Agusto & Co. Limited. No matter contained herein may be reproduced, duplicated or copied by any means
whatsoever without the prior written consent of Agusto & Co. Limited. Action will be taken against companies or individuals who ignore this warning. The
information contained in this document has been obtained from published financial statements and other sources which we consider to be reliable but do not
guarantee as such. The opinions expressed in this document do not represent investment or other advice and should therefore not be construed as such. The
circulation of this document is restricted to whom it has been addressed. Any unauthorized disclosure or use of the information contained herein is prohibited.
2015 Corporate Rating Report – Nigerian Breweries Plc
Nigerian Breweries Plc
This is a company that possesses very strong financial condition
and very strong capacity to meet local currency obligations as and
when they fall due.
Issue Date: September 2015
Expiry Date: 30 June 2016
Previous Rating: None
Company Profile 3
Financial Condition 5
Ownership, Mgt & Staff 8
Financial Summary 11
Agusto & Co. Limited
UBA House (5th Floor)
Nigerian Breweries Plc (“Nigerian Breweries”, “NB” or “the Company”) is
the premier and largest brewing company in Nigeria. NB’s rating is
underlined by the Company’s dominant position in the Industry; highly
experienced and stable Board of Directors; and competent management
team. The rating is also supported by NB’s strong financial condition
which is validated by good profitability, low leverage, good cash flow
and adequate working capital.
Nigerian Breweries is a subsidiary of Heineken, the third largest global
player in the Brewery Industry with international ratings of Baa1 by
Moody’s and Bbb+ by Standard and Poor’s.
During the year ended 31 December 2014, NB’s turnover decreased
slightly by 1% to ₦266 billion but its profit before tax margin remained
strong, while its three-year weighted average return on equity of 46%
and three-year average profit before tax as a percentage of sales ratio of
23% are well above our benchmarks. In the same vein, cash flow
indicators such as operating cash flow as a percentage of sales (35%)
and operating profit margin (25%) surpass our expectations. Leverage
remains low, with 86% of liabilities as non-interest bearing. The
Company’s interest cover is also very good at 17 times.
The continuous decline in global crude oil prices since the last quarter of
2014 has negatively impacted the Nigerian economy leading to a
devaluation of the Naira by the Central Bank of Nigeria (CBN) from
N168/$ to N197/$. Manufacturers and businesses which are heavily
dependent on imported raw materials have been operating under strains.
However, Agusto & Co expects this to have a minimal impact on the
Company’s profitability as about two-thirds of the Company’s inputs are
sourced locally. In addition, the conclusion of the merger with
Nigerian Breweries Plc
Consolidated Breweries Plc with the expanded and diversified product
offering is projected to significantly improve sales in the short to
Based on the aforementioned, we have assigned NB a rating of ‘Aa’ with
a stable outlook.
•Strong demand for products.
•Diversified product offering
•Strong Parent Company
•Qualified and experienced management team.
•Strong Cash flow
•Poor state of infrastructure in the country
•Security issues especially in the North-East
•Declining consumer disposable income
Nigerian Breweries Plc
PROFILE OF NIGERIAN BREWERIES PLC
Incorporated in November 1946 as a limited liability Company, Nigerian Breweries became a public limited
liability company and was listed on the Nigerian Stock Exchange (NSE) in 1973. NB is currently the second
most capitalised stock on the NSE with market capitalisation of ₦0.9 trillion as at 20 August 2015. The major
shareholders of the Company are: Heineken N.V Group of the Netherlands holding (54.29%) through its
subsidiaries (Heineken Brouwerijen B.V. (38.68%) and Distilled Trading International B.V. (15.61%). The
remaining equity of 45.71% is held by Nigerians, foreign individuals and other institutional investors. The
Heineken N.V. group is the world’s third largest beer manufacturer by volume with operations in more than
70 countries, producing notable international brands such as Heineken.
The Company built its first brewery in Lagos and recorded a landmark when the first bottle of Star lager beer
was rolled off at the brewery bottling lines in June 1949. In 1957, the second brewery was commissioned in
Aba; Kaduna brewery was established in 1963 and Ibadan in 1982. In 1993, another brewery was
commissioned in Enugu but was discontinued in 2004 as a result of the construction of Ama Brewery which
was commissioned in October 2003. The Ama brewery is currently the largest and most modern brewery in
Nigeria. In addition, an ultra-modern malting plant was acquired in Aba in 2008. Following the conclusion of
the merger between the Company and Consolidated Breweries Plc (CB plc) in 2014, three breweries (located
in Imagbon, Awo-Omamma and Makurdi) were added to the already existing eight breweries owned by NB. In
total, NB currently operates eleven breweries and two malting plants, spread across Nigeria.
Since the launch of Star lager beer in 1949, the Company’s product portfolio has expanded remarkably to
include alcoholic beverages such as Gulder (1970), Legend Extra Stout (1992) and Heineken (re-launched in
1998) as well as non-alcoholic beverages like Maltina (1976), Amstel Malta (1994), Fayrouz (2006) and
Climax (2010). Following the acquisition of Sona Systems and Life Breweries in 2011, Goldberg, Malta Gold
and Life Continental were added to the Company’s product range. In 2014, Nigerian Breweries introduced a
new line extension of the STAR brand called Star LITE, which contains 40% less calories compared to the
regular Star. In addition, Legend Extra Stout extended its market penetration with a new look - a new stanoil
and metalized label. In the same year, the Company introduced a new alcoholic beverage - ACE Passion
Apple Spark, its first sparkling alcoholic drink. In February 2015, a new product called ACE Roots was
launched as a healthy low sugar drink, being the second product to be launched under the ACE Series.
On account of the merger with CB Plc, the following products were added to the Company’s product
offerings: “33” Export lager beer, Williams dark ale, Turbo Kings dark ale, More lager beer, Maltex, Hi Malt
and Breezer, which is a blend of rum and fruits (in three variants). By 2015, NB had 19 brands in the Nigerian
market cutting across larger, stout, malt, ready-to-drink, carbonated soft drink and energy drinks.
Nigerian Breweries is the market leader, controlling about two thirds of the lager market in Nigeria. The
Company’s major competitor and key player in the stout market is Guinness Nigeria Plc (“Guinness”). NB’s
Nigerian Breweries Plc
products are distributed across the country through seven major cities: Lagos, Abuja, Enugu, Ibadan, Kaduna,
Aba and Benin. Dating back to 1986, the Company exports Gulder and Star to Europe and the West African
Nigerian Breweries’ Head Office is located at Iganmu House, 1 Abebe Village Road, Iganmu, Lagos. NB’s
fifteen-member Board of Directors comprises six executive and nine non-executive directors. The Board is
led by the Chairman - Chief Kolawole B. Jamodu (CFR), while the management team is led by Mr. Nicolaas A.
Vervelde as Managing Director/CEO. In the year under review, Messrs Jasper C. Hamaker and Frank N. Nweke,
Jr resigned from the Board, while Mr. Mark P. Rutten, Chief Samuel O. Bolarinde, Dr. Obadiah Mailafia and Mrs
Ndidi O. Nwuneli were appointed as Directors.
Table 1: Current Directors
Chief Kolawole B. Jamodu (CFR) Chairman
Mr. Nicolaas A. Vervelde Managing Director/CEO
Mr. Mark P. Rutten Finance Director
Mr. Franco Maggi Marketing Director (effective 1st September 2015)
Mr. Hurbert I. Eze Sales Director
Mr. Victor Famuyibo Human Resources Director
Mr. Hendrik A. Wymenga Technical Director