Guinness Nigeria announces ₦3.8 bln half year profit
Guinness Nigeria Plc, one of the leading beverage and alcohol companies in Nigeria and a subsidiary of Diageo Plc, yesterday announced its unaudited results for its first half year period ended 31st December 2018.
The results which were released on the floor of the Nigerian Stock Exchange (NSE), showed that profit before tax increased to ₦3.8 billion, driven by lower finance charges, as a result of the rights issue, which more than offset operating profit decline in a challenging operating environment.
The results showed that Guinness Nigeria’s net sales declined four per cent in the period under review.
This, according to the brewer was primarily driven by the ongoing pressure in the lager segment as a result of the continued challenging operating environment.
It revealed that double digit growth in spirits and continued growth in Guinness mitigated some of the decline in the period. Also, the company’s gross profit declined 15 per cent as a result of net sales decline, as well as continued inflationary pressure on our raw material costs and lower fixed cost absorption.
Its marketing spend decreased 10 per cent as it continued to focus our investment behind the biggest growth opportunities, while its operating profit declined ₦2 billion as the productivity initiatives around marketing spend, distribution expenses and administrative expenses mitigated some of its inflationary cost of sales pressure.
Commenting on the results, Managing Director/CEO, Guinness Nigeria, Mr. Baker Magunda said: “In the half year ended 31st December 2018, Guinness Nigeria delivered results that reflected the continued challenges in the operating environment. While lager remains a challenged sector, Guinness and spirits recorded strong growth, and our non-alcoholic malt drinks grew in the face of intense competitive pressure.
“This re-affirms our total beverage alcohol portfolio strategy as a key driver of sustainable growth in the market. Looking forward, we will continue to focus on our strategy which is now based on four strategic pillars of growing our premium core faster, delivering our target cost absorption, continue innovating to meet consumer needs and driving productivity harder to improve performance in the business.
“Whilst we are conscious of the continued challenging operating environment with double digits inflation and pressured consumer spending, we remain optimistic about the execution of our strategy for the remainder of the 2019 financial year”.
On his part, Chairman of the Board of Guinness Nigeria, Mr. Babatunde Savage said: “The board is confident that our strategy is sound, and we are making the right investments in the company to ensure long term competitiveness.”
He further stated that “the board continues to support the management in its efforts to build a business that aims to consistently deliver growth for stakeholders.”