Nigeria: Guinness Nigeria Plc sees profit before tax decrease in half year to December 31
Guinness Nigeria Plc, a leading beverage and alcohol Company in Nigeria and a subsidiary of Diageo Plc has announced its unaudited results for its first half year period ended 31st December 2019 with Profit before tax decreased by N1.9 bln and Operating profit declined by N1.1 bln, WorldStage reported on January 30.
Highlights of the results which were released to the Nigerian Stock Exchange (NSE), showed that revenue increased 1% versus the prior comparable period as strong growth in the second fiscal quarter mitigated the decline from the first quarter, Cost of sales increased by 2% and Net finance charges at N1.6 bln.
Growth was mainly driven by strong double-digit growth in Brand Guinness and mainstream spirits. Together with growth in the RTD segment, this mitigated the impact of increased excise duty, and the impact of reduced exports on malts.
The cost lines grew in low single digits as improved productivity and volume driven cost absorption mitigated inflationary pressure. The company’s marketing increased as it continued to focus on growing brands in line with strategy. Operating profit declined by N1.1 bln mainly due to the impact of the excise duty increase. Profit before tax decreased by N1.9 bln driven by an increase in net financing costs related to short term loans.
Speaking on the announcement, Mr. Baker Magunda, Managing Director/CEO, Guinness Nigeria plc said, “In the half year ended 31st December 2019, Guinness Nigeria delivered results that reflected a very strong second fiscal quarter performance despite continued regulatory, competitive and inflationary challenges in the operating environment. Strong growth in Guinness, spirits and RTDs together with cost benefit from various productivity initiatives has helped to mitigate other risks. I am pleased that revenue growth is in line with our strategy driven by better commercial execution and innovations. Within the period, we continued activating several innovations such as Guinness Smooth, Guinness Gold, Baileys Delight, Orijin Gin, Singleton and Johnnie Walker Green label. These have contributed significantly to the growth. Despite the increase in excise duties on beer and mainstream spirits, the competitive environment was such that there was lack of pricing opportunities in the period to mitigate this.
“Looking forward, we will continue to drive our strategy which hasdeliberate focus on key categories, growing spirits faster, continuingto innovateto meet consumer needs, and drivingproductivity. Whilst we are conscious of the continued challenging operating environment with double digit inflation and pressured consumer spending, we arepositiveabout the execution of our strategy for the remainder of the 2020 financial year. We remain confident of theresilience of our Total Beverage Alcohol portfolio strategy as a key driver of sustainable growth in the market”, he added.
On his part, Mr. Babatunde Savage, Chairman of the Board of Guinness Nigeria Plc, said, “The Board is confident that our strategy is sound, and we are making the right investments in the company and brands 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.”
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