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Nigerian Breweries Announces 142.8% Jump in Profit in H1 2022

Nigerian Breweries Plc on Friday reported a whopping 142.8% jump in profit after tax realised in the first half (H1) of 2022.

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Nigerian Breweries - Investors King

Nigerian Breweries Plc on Friday reported a whopping 142.8% jump in profit after tax realised in the first half (H1) of 2022.

In the company’s unaudited financial statement obtained by Investors King, revenue grew by 31% from N209.031 billion recorded in the first half of 2021 to N274.085 billion in the period under review.

Cost of sales stood at N155.349 billion, an increase of 18.3% from N131.340 billion filed in the corresponding period of 2021.

Gross profit rose by 52.4% from N77.917 billion in H1 2021 to N118.736 billion in H1 2022 while marketing, distribution and administration expenses surged by 44.8 percent to N84.896 billion from N58.628 billion.

Results from operating activities expanded by 79.9% to N35.840 billion, up from N19.917 billion achieved in H1 2021.

Nigerian Breweries grew profit before tax to N25.697 billion in the period under review from N11.940 billion filed in H1 2021.

The company paid N6.954 billion in income tax to post N18.743 billion profit after tax. This represents an increase of N142.8% growth from N7.858 billion recorded in H1 2021.

In a press release signed by Uaboi G. Agbebaku, Esq., Company Secretary, Nigerian Breweries said profitability was driven by the company’s pricing strategy and better mix.

However, the increase in the cost of sales was attributed to the recent surge in commodity prices due to internal and external factors.

“The increase in operating profit and profit after tax was driven mainly by top line growth resulting from our pricing strategy and better mix. Increase in cost of sales was due to rise in commodity prices. Marketing, distribution and administration expenses were driven by the increase in commercial activities, rising diesel prices and higher wages arising from collective labour agreements,” the company stated.

“Although interest expenses were lower, the net finance cost was higher due to foreign exchange losses arising from a higher cost of meeting foreign obligations to overseas partners.

“Our business continues to build momentum and deliver consistent profitable growth even in the context of a very challenging operating environment. Our best-in-class portfolio of brands provides a unique platform that positions us well to lead and grow the beer and malt category and drive superior long-term value creation.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Dangote’s $20 Billion Refinery to Begin Petrol Sales Next Month

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Aliko Dangote announced on Monday that his long-awaited $20 billion refinery complex will commence petrol sales starting next month.

The announcement came during a press briefing held at the refinery site in Lagos, where Aliko Dangote, Africa’s richest man, detailed the project’s progress and future plans.

“We are proud to announce that the Dangote Refinery will begin selling petrol from August,” Dangote stated confidently.

“This milestone marks the culmination of years of meticulous planning, construction, and overcoming numerous challenges.”

Dangote’s refinery, touted as the largest single-train refinery in the world, is designed to process 650,000 barrels of crude oil per day once fully operational.

The facility aims to not only meet Nigeria’s domestic demand for refined petroleum products but also contribute significantly to export markets across West Africa.

“We have entered the steady-state production phase earlier this year, and now we are ready to begin commercial sales,” Dangote explained. “Initially, we will focus on petrol production, with plans to expand our product range as we ramp up to full capacity.”

The refinery’s launch is expected to alleviate Nigeria’s longstanding dependence on imported refined products, thereby boosting the country’s energy security and reducing foreign exchange outflows associated with fuel imports.

Beyond petrol sales, Dangote revealed ambitious plans to list both the refinery and its associated fertilizer plant on the Nigerian Exchange Group (NGX) by the first quarter of 2025.

This move aims to attract broader investor participation and unlock additional value for shareholders.

“We are committed to transparency and accountability in our operations,” Dangote emphasized. “Listing these subsidiaries on the NGX will not only strengthen our corporate governance framework but also enhance the refinery’s financial sustainability.”

Challenges and Future Prospects

Despite celebrating the imminent commencement of petrol sales, Dangote acknowledged challenges encountered during the project’s execution, including delays in securing land for a petrochemical facility in Ogun State, which incurred substantial costs.

“We faced bureaucratic hurdles that resulted in significant delays and financial losses,” Dangote lamented. “Nevertheless, we remain steadfast in our commitment to advancing Nigeria’s industrial capabilities and contributing to economic growth.”

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NNPC’s Stake in Dangote Refinery Drops to 7.2% Due to Unpaid Balance

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Dangote Refinery

Aliko Dangote, the Chief Executive Officer of Dangote Refinery, announced that the Nigerian National Petroleum Corporation (NNPC) Limited’s stake in the refinery has dropped from the previously held 20% to a mere 7.2%.

This reduction is attributed to NNPC’s failure to pay the balance of their shareholding dues, which was expected last month in June.

Dangote disclosed this during a media parley held at the refinery on Sunday, shedding light on the current ownership structure and the financial commitments made by the national oil company.

“The agreement was actually for 20%, but NNPC did not pay the balance of the money up till last year. We then gave them another extension up to June 2024, and they decided to remain at the 7.2% stake for which they had already paid,” Dangote stated.

This revelation has come as a surprise to many Nigerians who had been under the impression that the NNPC maintained a 20% stake in the refinery.

The reduction in ownership highlights the financial challenges faced by the state-owned oil company.

In 2021, the Group Managing Director of NNPC, Mele Kyari, had championed the decision to acquire a stake in the Dangote Refinery, citing the profit potential and the strategic importance of having a say in the refinery’s operations.

The investment was seen as critical to ensuring energy security for Nigeria and supporting the country’s fiscal stability.

Earlier this year, NNPC’s audited financial statements indicated that the corporation had acquired a 20% stake in Dangote Refinery for $2.76 billion.

This included a $1.036 billion funding from Lekki Refinery Funding Limited, of which $1 billion was paid to Dangote Refinery and $36 million covered transaction costs.

During the media parley, Dangote addressed various issues, including the challenges of supplying crude to the refinery.

He confirmed that the refinery has been sourcing crude from the United States and Brazil, while also noting the government’s intervention to resolve the supply issues.

The Dangote Refinery, located in the Lekki Free Zone, Lagos, is a massive project with a capacity of 650,000 barrels per day (BPD). Once fully operational, it aims to become Africa’s largest oil refinery and the world’s largest single-train facility.

The refinery is expected to generate approximately 9,500 direct jobs and an additional 25,000 indirect jobs, significantly boosting the local economy.

In addition to refining, the facility includes a fertiliser plant that will use by-products from the refinery as raw materials, further enhancing its economic and environmental impact.

The refinery is projected to produce around 50 million litres of petrol and 15 million litres of diesel daily, along with significant quantities of jet fuel and other petroleum products.

The reduction of NNPC’s stake underscores the financial complexities surrounding large-scale investments in Nigeria’s oil and gas sector.

As the Dangote Refinery nears full operation, the focus will be on how effectively it can address the country’s energy needs and contribute to economic growth, despite the challenges faced by its stakeholders.

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Dangote Refinery Buys 11 Million Barrels of American Crude Due to Domestic Shortages

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Dangote refinery

The Dangote Refinery has announced plans to acquire an additional 11 million barrels of crude oil from the United States.

In a tender viewed by Bloomberg, Dangote Refinery purchased five million barrels of West Texas Intermediate (WTI) Midland crude for delivery next month and in September.

The company has also initiated a tender process to buy another six million barrels of American crude for September.

Despite its reliance on local crude supplies, the refinery near Lagos has been forced to seek imports to sustain its operations.

With the ability to source crude from offshore terminals in just a few days, the refinery took in over 41 million barrels of feedstock in the first half of the year.

Notably, about a quarter of this amount was sourced from the United States.

Aliko Dangote, Chairman of Dangote Group, explained the necessity of importing crude oil as the refinery scales up production and explores alternative supply contracts.

“It makes economic sense for us to tender for crude. If we could source 100 percent Nigerian crude, then fine, but we can’t wait,” Dangote stated at the Africa CEO Forum 2024.

He further said it is important for a mix of different crude types to optimize operations, given the current limitations in domestic production.

The refinery’s recent acquisition contrasts with its earlier deliveries, which included 11 WTI cargoes, or nine million barrels, between February and May, alongside approximately 18 million barrels of Nigerian crude.

This move to secure a longer-term offtake agreement indicates a commitment to diversifying crude sources, particularly during a period of weak demand for Nigerian supply.

The Nigerian National Petroleum Company (NNPC), which holds a 20 percent equity stake in the refinery, has faced difficulties meeting its 300,000 barrels per day (bpd) crude oil obligation.

In June, Nigeria’s crude output was around 1.28 million barrels per day, significantly below its estimated production capacity of 2.6 million barrels per day.

Factors such as crude theft, aging oil pipelines, low investment, and divestments by major oil companies have all contributed to declining production.

Despite various assurances from the federal government and the NNPC about meeting the country’s OPEC quota, Nigeria recorded an estimated 30 million barrels of underproduction in the first four months of 2024.

Efforts to curb insecurity in the Niger Delta, where Nigeria’s oil is extracted, have included a multi-billion-naira contract with local security groups and substantial spending on official security agencies. Nonetheless, oil theft, asset vandalism, and sabotage remain rampant in the region.

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