Abstract: This paper investigated the extent to which exchange rate instability influence the profitability of breweries in Nigeria from 1990 to 2018. In consideration of the vulnerability of brewing companies’ earnings to exchange rates movements, the multiple regression analysis of the ordinary least square (OLS) estimation technique through the use of secondary data was employed in this study. The model formulated depicts net profit as the dependent variable while Exchange Rate, export at a particular point in time, import at a particular point in time, investment and industrial production are proxied as independent variables. The results revealed that exchange rate instability has a significant negative impact on the profitability of breweries in Nigeria. The implication is that exchange rate instability brings about decrease in the profitability of the three breweries studied. From the findings, this paper recommends that policy makers and brewers should emphasis substitution of imported with local raw materials to save the high cost of foreign exchange for procuring foreign raw materials. They should also embark on backward and/or forward integration for easy and cost effective acquisition of input materials.
Keywords: Exchange Rate instability, profitability, breweries, Nigeria, manufacturing, industrial production, business environment.
Title: Exchange Rate Instability and Profitability of Selected Breweries in Nigeria (1990-2018)
Author: Ezeilo, Florence Ijeoma., Ebenebe Adaora Ogechukwu
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
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