Guinness Nigeria full year profit after tax drops 329% impacted by COVID-19

NIGERIA – Diageo’s Nigerian operating unit, Guinness Nigeria Plc, has announced its audited results for the period ended 30 June, 2020 revealing a 329% decline in profit after tax at N12.57bn (US$32.6m) resulting from the significant impact of COVID-19 lockdowns and ongoing economic challenges.

The audited results which were released to the Nigerian Stock Exchange (NSE) indicated that revenue decreased 21% to N104.376bn (US$270.97m) versus N131.49bn (US$341.37m) registered the prior period of 2019.

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Profit was impacted by a number of one-off accounting adjustments totaling N17.2bn (US$44.65m), as well as volume declines due to the prevailing economic and COVID-19 impacted conditions.

Closures of on-trade premises i.e. bars, lounges, clubs and dine-in restaurants which represent the major part of the consumption occasion for the company’s products; and bans on celebratory occasions is said to have impacted sales.

Demand of its products was also impacted by reduced consumer income, unemployment concerns due to the shutdown of a large number of businesses, and increases of VAT and excise throughout the year.

This led to a net loss after tax of N12.6bn (US$32.7m) compared to a profit of N5.48bn (US$14.22m) in 2019.

Excluding the accounting adjustments, the underlying performance remained strong despite the impacted top line performance, indicated the brewer.

Speaking on the announcement, Mr. Baker Magunda, Managing Director/CEO, Guinness Nigeria Plc said, “The last quarter performance of fiscal 2020 was significantly impacted by restrictions due to COVID-19, exacerbating the already challenging economic environment.”

“Distribution was further impacted by the ban of inter-state, and in some cases intra-state travel. Although Management worked diligently with regulatory authorities to minimise the impact, this hampered our distributors ability to restock and have our brands available for purchase,” Magunda explained.

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The company however revealed that its reaction to the challenges presented by the COVID-19 lockdown in Q4 was centered around reducing risk to the business by focusing on cash delivery, reducing distributor inventories, and fast-tracking the ongoing distribution transformation project for efficient sales operations.

This focus ensured a reduction of trade receivables by 88% over same period last year.

“We also focused on cost management by reacting to the drop in demand by reducing operations for a month.

“Agile actions taken in the period impacted by COVID-19 complemented the work already undertaken throughout the year to reduce Cost of Sales by year end,” Managing Director/CEO, Guinness Nigeria Plc, Baker Magunda said.

Its cost of sales during the year under review declined by 22%.

Going into the new fiscal year, the market leader in Stout segment has stated that it is conscious of the continued challenging operating environment with double-digit inflation and pressured consumer income spending.

However, it believes the focus it has put in optimising its route to consumer, reducing credit risk and managing cost control will position it to emerge even stronger from the current crisis.

The Chairman of the Board of Guinness Nigeria Plc, Babatunde Savage assured that, “the Board will continue to support the Management in its efforts to sustain global best practices aimed at consistently delivering business growth for stakeholders.

“We remain confident that the strategy is comprehensive and robust, and that we are making the right investments in the company to ensure our long-term competitiveness.”

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