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Companies

Nigerian Breweries to pay Heineken BV mega dividend of N2.9 billion

The parent company of Nigerian Breweries Plc, Heineken B.V., is set to earn N2.9 billion in dividends for the financial year ended December 2020

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To protect margins, Nigeria’s top brewers are set to increase prices , Nigerian Breweries, Economy: Local corporates taking advantage of the low yield environment , Nigerian Breweries goes to the retail lab, Analysis: Nigeria Breweries, the glory days are gone

The parent company of Nigerian Breweries Plc, Heineken B.V., is set to earn a mega N2.9 billion in dividend for the financial year ended December 2020.

The multinational brewing company, headquartered in the Netherlands is the single majority shareholder of Nigerian Breweries, with 3,034,100,564 units of the total issued shares of its subsidiary.

This puts the ownership stake of the Dutch multinational at 37.94%, ahead of Distilled Trading International B.V. and Stanbic IBTC Nominees Limited with 15.47% and 11.37% ownership stake respectively.

READ: Nigerian Breweries to raise more funds

In case you missed it

Recall that the Board of Directors of Nigerian Breweries Plc a in a statement released via the Nigerian Stock Exchange proposed a final dividend of 69kobo per share. This puts the total dividend payout of the company at N94 per share for the financial year 2020 (interim: 25kobo). When converted to dollars, the dividend amounts to about $6.93 million based on an exchange rate of N411.88/$1.

Despite the headwinds the company suffered in 2020, the brewer was able to maintain its tradition of dividend payment to shareholders in 2020, despite taking a major shock in its profit during the year (54%).

  • Nigerian Breweries in 2020 delivered a consistent result in terms of revenue, amidst the ongoing COVID-19 pandemic which disrupted supply chains globally.
  • The net revenue of the leading brewing company increased by 4.3% in 2020 (N337 billion), compared to FY’19 figures (N323 billion).
  • The increase in Nigerian Breweries’ costs of goods sold, as reported in its audited financial results, as well as the increase in its finance cost pressured the brewer’s profit in 2020.
  • The increase in Nigerian Breweries’ cost of goods sold can be attributed to currency devaluation spiked by foreign exchange scarcity, this exerted upward pressures on the costs of imported input materials such as sorghum and sugar – which are not fully produced locally.

READ: Guinness Nigeria Plc jostles to improve from its insipid 2020 financial year

What you should know

  • Nigerian Breweries Plc, a company formed out of a contract for incorporation signed by UAC and Heineken in November 1946, has grown to become the largest brewer in Nigeria in terms of market size.
  • Thanks to the merger between NB and Consolidated Breweries in 2014, it has nine fully operational breweries from which its products are produced and distributed to all parts of Nigeria, with additional two malting plants in Aba and Kaduna – taking its total operation in Nigeria to the 11.
  • The Merger also increased the company’s brand portfolio to 19 brands, while its Stock Keeping Units -SKU’s- increased to 59.
  • Aside from producing to satisfy and meet local consumption and demand, the Company has an export business that dates back to 1986.

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Omokolade Ajayi is a graduate of Economics, and a certificate holder of the CFA Institute’s Investment Foundation Program. He is a business analyst, and equity market researcher, with wealth of experience as a retail investor.

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Companies

First Bank’s board replacement won’t affect profitability – Fitch

CBN’s remedial actions will not have a material effect on the group’s asset quality, profitability and capitalisation.

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Fitch Ratings has affirmed that the recent First Bank board replacement will not affect the bank’s profitability and asset quality, as it rates the bank at B- with a negative outlook.

This was disclosed by the rating firm via a statement seen by Nairametrics.

According to the rating firm, the development reflects its view that the impact of the Central Bank of Nigeria’s replacement of FBNH and FBN Ltd boards, the identification of corporate governance failings and the imposition of corrective measures are tolerable at the rating level.

What Fitch is saying

It stated, “We have assessed the near-term financial impact of these actions on FBNH and FBN and believe this is tolerable at the rating level, even though the final outcome is uncertain. In our view, any remedial actions imposed by the CBN, including a potential reclassification of related-party exposures as impaired, will not have a material effect on the group’s asset quality, profitability and capitalisation.

However, this does not consider any possible additional actions by the CBN, especially if FBN fails to implement the regulator’s corrective measures or if there were any further uncovering of corporate governance irregularities.

The Outlook remains Negative, reflecting FBNH’s pre-existing asset quality and capitalisation weaknesses as well as the group’s corporate governance weaknesses highlighted by the CBN. These could put pressure on the ratings.”

What drives First Bank’s rating

FBNH is the non-operating holding company that owns FBN. FBNH’s ratings are aligned with those of FBN (which represents around 90% of consolidated group assets) due to high capital and liquidity fungibility within the group, and low double leverage (at 95% at end-1H20) at the holding company level.

It added that FBNH’s IDR is driven by its intrinsic creditworthiness, as defined by its ‘b-‘ Viability Rating (VR). The rating, according to Fitch, considers the group’s exposure to Nigeria’s volatile operating environment and also factors in vulnerability in its capital position in the context of moderate earnings generation and asset-quality pressures, where headroom above the minimum regulatory capital requirements is also moderate. Capitalisation is a factor of high importance to VR.

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“The new boards appointed to FBNH and FBN comprise individuals with sufficient experience and expertise. However, we view such major change as hugely disruptive. There are no changes in FBNH and FBN’s executive management team.

“We believe the governance shortcomings cited by the CBN reflect poorly on FBNH’s reputation and on the group’s governance and control practices. As a result, we have revised down our assessment of FBNH’s Management and Strategy score to ‘b-‘ from ‘b’.

“We also assigned a negative outlook to this factor, which reflects the uncertainty surrounding additional remedial actions that the CBN may impose due to these related party exposures as well as the potential for further uncovering of governance irregularities. It also captures the lack of track record of the new board and its ability to restore confidence in FBNH and FBN,” it added.

Asset quality remains a rating weakness. FBNH reported an improved impaired loan ratio of 7.9% at end-1Q21 (end-2020: 7.7%). However, FBNH’s reported reserve coverage of 54.5% at end-1Q21 (end-2020: 48%) remains significantly weaker than domestic peers’.

“Our assessment indicates that if the related-party loan highlighted by the CBN were classified as impaired, the ratio would be unlikely to be above 10% (excluding any new impaired loan generation from ordinary business),” Fitch added.

What you should know

On 29 April 2021, the CBN removed the non-executive directors on the boards of FBNH and FBN and replaced them with new individuals appointed by the apex bank, according to Nairametrics.

The CBN gave a series of reasons for its action including the unjustified and unapproved change of the bank’s MD/CEO by the former board, corporate governance failings pertaining to long-standing insider loans that were affecting the bank’s capitalisation and failure to comply with regulatory directives.

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Appointments

Airtel Nigeria announces appointment of Surendran as new Chief Executive Officer

Airtel Nigeria, has announced the appointment of Mr C. Surendran as the new MD/CEO with effect from August 1, 2021.

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Like MTN, is Airtel Nigeria considering listing?

Telecommunications giant, Airtel Nigeria, has announced the appointment of Mr C. Surendran as the new Managing Director and Chief Executive Officer with effect from August 1, 2021.

Surendran would be replacing the outgoing Managing Director and Chief Executive of Airtel Nigeria, Olusegun Ogunsanya, who has been elevated to the position of Chief Executive Officer of Airtel Africa Plc with effect from October 1, 2021.

According to a report from the News Agency of Nigeria, this disclosure is contained in a statement issued by Airtel on Wednesday, May 5, 2021, in Lagos.

READ: Airtel Africa signs new $500 million loan with Bank of America, HSBC, others

The statement says that Surendran would also be appointed to the Executive Committee (ExCo) as Regional Operating Director, reporting to the CEO of Airtel Africa plc, and onto the Board of Airtel Networks (Nigeria) Limited.

Airtel in its statement said, “Surendran has been with Bharti Airtel since 2003 and has contributed immensely in various roles across customer experience, sales and business operations.

He was the Chief Executive Officer of Karnataka, which is the largest circle in Airtel India, with over one billion dollars in revenue.

Surendran delivered an exceptional performance with significant movement in Revenue Market Share (RMS) over the last few years, currently at 54 percent. He has over 30 years of business experience, including 15 years at Xerox.’’

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Airtel said that Surendran would transition into his new role from June 1, 2021, and spend the time onboarding into the business until July 31, 2021.

READ: Meet the latest billionaires on the Nigerian Stock Exchange

In case you missed it

It can be recalled that a few days ago, Airtel Africa Plc, a leading provider of telecommunications and mobile money services in Nigeria and 13 other countries, announced the appointment of Mr Olusegun Ogunsanya as the new Chief Executive Officer, following the notice of retirement given by the current Managing Director/Chief Executive Officer, Raghunath Mandava, to the Board.

In the notification sent by Airtel Africa to the Nigerian Exchange, Ogunsanya is expected to join the board of Airtel Africa with effect from October 1, 2021.

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