Champion Breweries, the only profitable brewer in Nigeria, is swimming against the tide of FX-induced losses in the beer industry.
Champion Breweries posted a net profit of N817 million in the 2024 financial year, representing a 120 percent growth from the N370.6 million recorded in 2023.
This marks the second consecutive year that the Uyo-based beer maker has continued to remain the only profitable brewer in Nigeria.
Despite the steep decline in the exchange rate, Champion Breweries improved its net profit margin to 3.9 percent in 2024, up from 2.9 percent in 2023.
In contrast, Nigerian Breweries, the largest brewer in Nigeria, recorded N1.08 trillion in revenue but suffered a N144.9 billion net loss, up from N106.3 billion in 2023. As of the first nine months of 2024, International Breweries was on a N112.8 billion net loss, a 295 percent increase.
Why is Champion Breweries the only profitable brewer in Nigeria?
Addressing this question requires a deep understanding of the key factors driving losses among Nigerian brewers and, more broadly, manufacturers across various industries.
Reduced exposure to FX volatility
One of the key drivers behind Champion Breweries’ sustained profitability has been its limited exposure to FX volatility. In 2024, the company recorded an FX loss of N708.4 million, a significant increase from N55.9 million in 2023. However, compared to other brewers, currency fluctuations had a far lesser impact on its financial performance.
Champion Breweries’ FX losses to revenue ratio stood at 3 percent, far lower than its industry counterparts. Nigerian Breweries, with N157.5 billion in FX losses, reported a ratio of 15 percent. Guinness Nigeria’s N112 billion FX losses for 2024 translated into a much higher 37.5 percent.
Foreign exchange exposure is unavoidable in the Nigerian brewing industry, largely due to the reliance on imported raw materials. However, in 2023, Champion Breweries secured a supply arrangement for sorghum that effectively hedged against currency volatility, helping to mitigate its FX risk. It remains unclear whether a similar strategy was implemented in 2024.
Stronger liquidity
Champion Breweries boasts stronger liquidity than its competitors. In 2024, it recorded a cash ratio of 0.47, nearly double Nigerian Breweries’ 0.24, while Guinness Nigeria had a negative cash ratio.
Typically, higher liquidity suggests a conservative investment approach. In this case, it highlights Champion Breweries’ minimal reliance on debt for working capital. The company avoided interest expenses in 2024, using its cash to fully repay bank loans. In contrast, Nigerian Breweries took on an additional N331.4 billion in bank loans while repaying N381.9 billion.
Efficient business operations
Champions Breweries improved its efficiency in 2024, achieving a 4 percent ROA and an asset turnover ratio of 1.00, up from 2 percent ROA and 0.71 in 2023. The growth in their asset turnover indicates the company improved its ability to convert assets into revenue.
Despite a 0.96 asset turnover ratio, Nigerian Breweries reported a -13 percent ROA, while Guinness Nigeria, with a higher 1.03 asset turnover ratio, also posted a negative ROA in H1 2025.
Another measure of Champions Breweries’ more efficient operations is its inventory turnover ratio. The company has one of the highest inventory turnovers among Nigeria’s manufacturers, with a ratio of 45.1. On the other hand, Nigerian Breweries has an inventory turnover ratio of 5.04.
While Champions Breweries is a smaller player in Nigeria’s brewing industry, its lower FX exposure, stronger liquidity, and superior operational efficiency have positioned it as the only profitable brewer.
As competitors grapple with high debt, FX losses, and inefficient operations, Champions Breweries’ strategic choices continue to drive its resilience in a volatile market. (BusinessDay)
