Economy
ANALYSIS: The Problem With International Breweries N165bn Rights Issue
By Dipo Olowookere
Not too long ago, the board of International Breweries announced that it plans to raise about N165 billion from its existing shareholders through rights issue.
According to board, proceeds from the exercise would be wholly used to refinance part of the N245 billion debts the brewery giant incurred from five local and foreign lending institutions; Citibank N.A, Zenith Bank, Standard Chartered Bank Nigeria, Stanbic IBTC and Rand Merchant Bank Nigeria.
Analysts at Meristem Research said if this exercise is 100 percent successful, the company’s debt burden should significantly reduce by 66 percent to about N81.90 billion, with the finance costs hovering between N5.5 billion and N6 billion in 2020.
But it noted that while this should be good news to shareholders of the firm, the bitter truth is that International Breweries has been operating at a loss since 2017 and that the N165 billion rights issue may have little impact on the overall performance of the company without a strategy to effectively cut costs.
“We note that the financing decision does not solve the operating problems of the company which is responsible for the poor margins,” the investment firm said in its report seen by Business Post.
It further said, “Costs have been high and hampering profits and if this persists, the company’s performance will not improve. Therefore, we believe that International Breweries’ current operating profile negatively affects its ability to deliver value to shareholders.”
“In addition, the potential dilution in earnings will erode the near-term benefits. We also expect that the company will require additional capital to boost its working capital needs, a measure that will not materialise with this issue.
“Hence, we expect it to raise debt in the near term or equities with the potential for more earnings dilution. We therefore do not expect the benefits of this financing decision to improve margins in the near-term,” the report also stated.
Giving an insight on the brewery giant’s performance, Meristem Research said before it became a subsidiary of AB InBev, the largest beer producer in the world, the brewer operated an average cost to sales of 55.12 percent, second to Nigerian Breweries at 52.88 percent, the cost leader in the industry.
However, since this deal was finalised, the firm has made consecutive losses, which worsened to N16.45 billion in 9M:2019, with cost to sales trending northwards at 60.75 percent in 2018FY, 64.42 percent in Q1:2019, reaching its highest point of 68.00 percent in 9M:2019 due to a spike in production costs- raw material costs and production staff salaries shot up by 27.99 percent and 45.22 percent respectively.
In addition, revenue has continued to decline despite initially rising after the completion of its new plant in Sagamu, Ogun State, which ranks as the second largest in Africa.
The turnover first grew YoY by 32.16 percent and 23.54 percent in Q1:2019 and Q2:2019 respectively, but went down by 5.32 percent to N28.63 billion in Q3:2019 from N30.24 billion in Q3:2018 as increased excise duties and competitive pressures constrained topline growth. Also, the firm’s depreciation charges rose in 9M:2019 by 31.54 percent YoY, contracting the gross margin to 32.00 percent (vs. 38.67 percent in 9M:2018).
It was noted that high operating costs has been another worrisome trend post-merger, a major factor for the thinning operating margin which turned negative in 9M:2019 at -11.25 percent, saying the firm has been expending higher costs on advertising (+36.10 percent in 9M:2019) as well as transportation and distribution expenses (up by 36.53 percent during the same period) in order to stay competitive.
“Apart from the high production and overhead costs pressuring margins, finance costs, which increased by 45.81 percent to N13.14 billion in 9M:2019, has been a drag on the company’s performance.
“Benefits can only accrue to shareholders if the company maintains a lid on costs, which seems to be slipping out of hand,” the report stated.
International Breweries, which controls 20.35 percent of the beer sector in Nigeria as at FY2018, is raising N165 billion by selling 18,266,206,614 units of shares on the basis of 17 new shares for every eight held by shareholders whose names were on the register of the company as at November 6, 2019 at N9.00 each.
Meristem Research, giving its verdict on the exercise based on the above issues it highlighted, declared that, “We do not recommend that shareholders take up their rights.”
By Aduragbemi Omiyale
African leaders have been advised to focus on economic integration through industrialisation, as this would make the continent a formidable force in the global market.
This charge was given by the Minister of State in the Tanzanian President’s Office responsible for Planning and Investment, Prof. Kitila A. Mkumbo, during a visit to the Dangote Petroleum Refinery and Petrochemicals in Lagos.
“Africa now needs economic liberation, and that can only come through industrialisation,” he said, describing Mr Aliko Dangote as Africa’s leading industrialist whose investments are increasingly extending beyond Nigeria to support development across the continent.
He added that Tanzania looks forward to working with Dangote Group as part of a broader vision of accelerating Pan-African industrialisation and strengthening regional manufacturing capacity.
The Minister also highlighted the importance of local refining capacity in improving Africa’s energy security, particularly in light of recent disruptions in global oil markets.
Referring to the impact of tensions around the Strait of Hormuz on global fuel prices, he said increased refining capacity from facilities such as the Dangote Petroleum Refinery would help cushion African economies against external shocks.
According to him, affordable and reliable energy remains one of the most important drivers of economic development, noting that expanded refining capacity across the continent would contribute significantly to lowering energy costs and improving the quality of life for millions of Africans.
The Tanzanian delegation was in Nigeria to follow up on discussions held earlier this year between President Samia Suluhu Hassan and Mr Dangote regarding the expansion of Dangote Group’s investment footprint in Tanzania.
The East African nation reaffirmed its commitment to deepening economic cooperation with Dangote Group, expressing strong interest in attracting new investments in fertiliser production, energy and industrial infrastructure to support the country’s long-term development agenda.
“We have come here to make a follow-up on what they deliberated with our President in terms of further Dangote investments in Tanzania,” Mr Mkumbo said.
By Aduragbemi Omiyale
One of the leading brewers and beverage companies listed on the Nigerian Exchange (NGX) Limited, Champion Breweries Plc, has expressed its commitment to strengthening its market position.
The beer maker gave this assurance while reacting to its financial performance for the first half of 2026, which was strong, driven by solid commercial performance, improved operational efficiencies, and the successful expansion of its business portfolio following the acquisition of EnjoyBev B.V.
In the period under review, the organisation boosted its growth platform through strategic investment, delivered resilient operating performance, and successfully transitioned to a new group structure.
Its revenue reached N35.73 billion, while second-quarter revenue amounted to N21.37 billion. Operating profit stood at N6.17 billion, and profit after tax attributable to the group was N2.65 billion, with second-quarter profit after tax of N1.76 billion.
The firm also successfully completed the acquisition of an 80 per cent equity interest in EnjoyBev B.V., strengthened its capital base through a successful capital raising programme that increased shareholders’ equity to N69.08 billion, and maintained full compliance with NGX free float requirements, with free float increasing to 25.72 per cent as of June 30, 2026.
“The first half of 2026 marks a defining chapter in Champion Breweries’ journey. We have not only delivered a strong operating performance but also successfully transformed our business into a broader beverage group with an expanded platform for sustainable growth.
“While higher finance costs associated with our strategic investment programme impacted profitability during the period, our underlying business remains strong.
“The combination of disciplined commercial execution, continued investment in our brands and route-to-market capabilities and improving operational efficiency positions us well for future growth.
“We remain focused on creating long-term value for shareholders, strengthening our market position, and capturing the opportunities presented by our expanded business platform,” the acting chief executive of Champion Breweries, Mr Rasheed Adebiyi, said.
For businesses operating across borders, payments are no longer simply the final step in a transaction. The way money moves can influence where a company sells, how quickly it can enter a new market, and how easily customers can complete a purchase. As digital payment methods become more diverse, businesses are adjusting not only their checkout options but also the way payment processes fit into wider operations.
This shift is particularly visible in international commerce. A company can now serve customers in multiple markets without relying on a single payment method or a traditional physical presence in each location. Digital payments have become part of the infrastructure that supports increasingly distributed business models.
A More Connected Payment Environment
Global commerce has created a more complicated payment environment. Customers in different countries may have very different expectations about how a purchase should be paid for. Some markets rely heavily on cards, while others have seen rapid adoption of digital wallets, bank-based payment methods, or other local alternatives.
For businesses, this variety creates both opportunities and practical challenges. Offering payment options that customers recognize can reduce friction during a transaction, while supporting several markets may require businesses to work with different payment technologies and providers.
Digital payments have therefore become closely connected to market expansion. A company entering a new country does not only need to consider demand for its products or services. It also needs to understand how customers in that market prefer to pay and whether its existing payment setup can accommodate those expectations.
More Choices for Businesses and Customers
The growth of digital payments has expanded the range of choices available on both sides of a transaction.
Consumers can increasingly choose between cards, digital wallets, bank transfers, mobile payment methods and other forms of electronic payment. Businesses, meanwhile, can select from different technologies and payment providers depending on their markets and operational requirements.
This development has changed the role of payments in the customer experience. Payment is no longer necessarily treated as an isolated technical process that begins only after a purchasing decision has been made. The available options can influence whether a customer completes a transaction in the first place.
For international businesses, flexibility can be particularly important. A payment method that is familiar and convenient in one market may be less relevant in another. Supporting a broader selection can allow businesses to adapt their payment experience without changing the underlying product or service.
The Rise of Alternative Payment Models
Traditional card and bank-based payments remain important, but the digital payments landscape has expanded beyond these established methods. Digital wallets, account-to-account payments, mobile solutions and cryptocurrency have all contributed to a broader definition of what a digital transaction can look like.
Cryptocurrency remains a smaller part of the overall payments landscape, but it has created another category of payment technology for businesses to consider. Specialized solutions such as BitHide can provide businesses with tools for handling crypto payments as part of their broader payment operations.
The significance of this development is not necessarily that every business will adopt cryptocurrency. Rather, it demonstrates how the payment landscape continues to diversify. Businesses operating internationally can increasingly choose from different models instead of relying on a single approach across every market.
Payments Are Becoming Part of Business Operations
As payment systems become more digital, their role increasingly extends beyond accepting money from customers. Payment processes can interact with accounting, order management, customer records and other parts of a company’s digital operations.
This is particularly relevant for businesses with large transaction volumes or customers in multiple countries. Manual payment processes can become difficult to manage as the number of transactions, currencies and payment methods increases. Digital systems can help businesses organize these processes within a wider operational framework.
The result is a gradual shift in how companies think about payments. Instead of treating payment processing as a separate function, businesses are increasingly considering it alongside other elements of their digital infrastructure.
This does not mean that every company needs a complex payment setup. The appropriate approach depends on the business model, target markets, transaction volumes and types of customers involved. For some companies, a small number of established payment methods may be sufficient. Others may need a more flexible arrangement because of the markets they serve.
Adapting to Different Markets
One of the more important changes brought by digital payments is the ability to adapt payment experiences to different markets.
International businesses often face differences in consumer behavior, financial infrastructure and preferred payment methods. A payment strategy that works well domestically may therefore require adjustments when a company expands internationally.
Digital payment technology can make these adjustments more practical, but it does not remove the need for local market knowledge. Businesses still need to understand customer preferences, applicable requirements and the practical costs associated with different payment methods.
This makes payment strategy part of international expansion rather than an issue that can be addressed only after a new market has been entered.
What Comes Next for Global Businesses
The digital payments market is likely to continue becoming more diverse as businesses and customers adopt new ways of moving money. The important change may not be the replacement of one payment method by another, but the growing ability to combine different methods according to the needs of a particular business or market.
For global companies, this creates an emphasis on adaptability. Payment systems need to support the way a business operates rather than becoming a limitation on where and how it can sell.
Digital payments are consequently becoming more than a convenient alternative to cash or traditional payment processes. They are increasingly connected to international commerce, customer experience and day-to-day business operations. As payment options continue to develop, companies that can adapt their payment strategies to different markets will be better positioned to operate in an increasingly digital global economy.
