Boost for sorghum industry as NB’s local input sourcing hits 48%

Nigerian Breweries (NB) Plc’s local input sourcing in 2016 hit 48 percent as the largest brewer in the country developed two high-yielding hybrid sorghum varieties within the year.

The brewer partnered with Heineken Supply BV of the Netherlands to develop new hybrid sorghum varieties which had the potential to raise yield for farmers and increase the quality of sorghum malt, which is an essential input for the company.

The company equally entered into supply agreements with local cassava starch processors and currently has an off-take agreement with a multinational company with huge investment in sugarcane value chain. The brewer plans to replace imported sugar in its recipe with a local substitute.

Briefing newsmen at a pre-annual general meeting (AGM) held in Lagos, Nicolaas Vervelde, managing director/CEO of NB Plc, said the brewer planned to hit a 60 percent local raw materials sourcing by 2020.

According to Vervelde, the company had had two biggest sorghum plant in Africa—one in Aba and Kaduna—since 2008, stressing that the brewer was keen at investing in research and development (R&D).

“The fundamentals remain positive in Nigeria, though devaluation and inflation will continue to put pressure on input costs,” he said.

According to him, the company’s involvement in sorghum had created 50,000 to 60,000 jobs.

The NB recorded N314 billion revenue in 2016 as against N294 billion in the preceding year. However, profit after tax was N28.4 billion as against N38.05 billion in the preceding year.

“The operating environment in 2016 was very challenging especially from an input cost, FOREX and purchasing power perspectives. Our volume growth was in the mid-single digit region, coupled with the price increases that we implemented positively impacted our revenue growth,” the CEO explained.

According to Vervelde, the operating environment in 2017 was expected to be similar to 2016, but the company was confident that it would adapt to the operating environment as required, and stay committed to delivering a good return on investment to shareholders.

The CEO said the results had been positive and creditable over the years when all factors were considered.

“Despite the deterioration in consumer purchasing power, our robust brand portfolio which covers a broad spectrum of consumer needs enabled us to protect revenue and profitability,” he said.

The board of the company has recommended a total dividend of N28, 386, 181, 179 (Twenty Eight Billion, Three Hundred and Eighty Six Million, One Hundred and Eighty One Thousand, One Hundred and Seventy Nine Naira only) for approval at the forthcoming AGM on Wednesday (May 3).

ODINAKA ANUDU