The management of Nigerian Breweries Plc has explained the reasons behind its inability to increase its dividend policy for shareholders for the financial year ended December 31, 2012.

It said a major part of its profit was ploughed back into the business, owing to its recent acquisition of major breweries in the last financial year.

The Managing Director, Nigerian Breweries, Mr. Nicolaas Vervelde, said this during the company’s pre-Annual General Meeting in Lagos on Wednesday.

He said, “The company’s dividend policy is to give out 60 per cent of our profit to shareholders as dividends. The fact is that we paid out N3 per share to shareholders last year; and we also recommended the same amount for shareholders this year. We also did not declare any bonus issues.

“This is primarily owing to a number of financial commitments of the company within the year under consideration. We were involved in some acquisition and mergers, including the merger with Sona Systems Associates Business Management Limited and Life Breweries Company Limited.

“The important thing to note is that we didn’t ask our shareholders for funds for these major projects; and we had to majorly rely on the funds we generated from the business, which of course meant that we could not increase our dividend policy because we needed all the funds to put back into the business.”

Vervelde was, however, optimistic that the gains from the investment would soon begin to pay off, adding that this would translate into increased returns for investors and shareholders in the next few years.

The company’s Financial Director, Mr. Jasper Hamaker, said that there was increased focus on cost savings techniques, adding that a lot of investment was made in building capacity ahead of the anticipated market growth to support their strong brands.

He said that the expansion of its Aba plant, which began last year was due to be completed in 2014, explaining that this would make the plant to double its capacity and bring increased returns for the company.

Its full year result showed that the revenue was up by 4.4 per cent from N211.07bn in 2011, to N252.67bn, while its operating profit rose by 13.4 per cent from N56.39bn the year before, to N63.93bn in the year under consideration.

Hamaker also explained that high financing cost of the business led to the little change in its net profit for the year, adding that net profit rose marginally by 0.1 per cent to N38.06bn in the year under consideration.

“Despite the challenging market conditions, Nigerian remains a very attractive market and we intend to take advantage of this to grow our business,” he stated.

Source: (by Udeme Ekwere)