Guinness Nigeria Plc Reports Whopping N2 billion Loss In One Year, After Tax, Blame FX Policy

Guinness Nigeria Plc released its full year results for the period ended June 30th, 2016 reporting a loss after tax of about N2 billion and a loss per share of 113 kobo.

This is in contrast to a profit before tax of N7.7 billion reported in the same period last year. The company also reported a total gross revenue of N101.9 billion compared to the N118.4 billion reported same time in 2015..

Guinness has had to deal with declining profits since 2011, with profits falling every single year for the last 6 years. Back in 2011 Guinness reported a profit after tax of about N17.9 billion, its highest to date. However it failed to maintain such lofty profitability growth levels as newer and cheaper brands flood the market coupled by a significant change in taste by a new generation of drinkers.

A cursory look at the results reveal revenues dropped by about 13.5% to N101.9 billion year on year yet cost of sales came in at a whopping N60 billion just N3 billion shy of the N63 billion reported a year earlier. Nevertheless, the high cost of sales shaved off about 60% of Gross Profits compared to 46% a year earlier.

Rising finance cost of about N6.7 billion (2015 N4.8 billion) finally helped throw the company into its first loss in over a decade.

Speaking to the results, Peter Ndegwa, Managing Director/Chief Executive Officer, Guinness Nigeria Plc said that the combination of a tough economic environment and challenges with naira devaluation had a significant impact on Guinness Nigeria’s overall performance.

“Our performance this year was impacted by two major factors, one being the very tough economic challenges around consumer spending, driving consumer preferences towards value brands across the sector, the other, and more significant factor being the effect of FX policy and the devaluation of the Naira. When you take out the impact of the latter, our underlying performance for the year was broadly in line with the prior year in spite of the pressure on the top line.”

Mr Babatunde Savage, Chairman, Guinness Nigeria Plc, said:

“Despite the continuing deterioration in the operating environment, the Board is pleased to note that our core brands of Guinness FES and Malta Guinness are in growth and we now have a strong participation in the growing value segment of the market through Satzenbrau and Dubic. We have also started to see early signs that our decisions to acquire the distribution rights in Nigeria to the International Premium Spirits brands of Diageo and to invest in local capacity for spirits manufacturing are the right ones for the business.”