Guinness Nigeria issues a revenue warning with earnings impacted by COVID-19 pandemic

NIGERIA – Guinness Nigeria Plc, a leading beverage and alcohol company in Nigeria and a subsidiary of Diageo Plc has issued a revenue warning ahead of the release of its full year audited financial result for the period ended 30th June.

According to the brewer, the adverse impact of the sharp contraction in economic activities and the knock-on effect of the COVID-19 lockdown took a toll on the on-trade segment of its business across all markets with production and revenues been negatively affected.

The brewer of Origin drink said it carried out a comprehensive review of its asset base and made a strategic decision to impair a certain category of assets, which were generating suboptimal returns, in line with the company’s long-term strategy of delivering value to shareholders, reports Business Day Nigeria.

“Due to a combination of the impact of COVID-19 and the asset impairment, we expect the profitability of the Company for the Financial Year to 30th June 2020 to be impacted,” the company stated in a statement.

The Company’s balance sheet however remains strong, and this gives the Board the confidence that the Company has the right resources to continue to deliver the strategy,” it added.

The market leader in Stout segment reported revenue of N96.08 billion (US$248.1m) in the nine months that ended March 31, 2020, showing a fall of 5.3% compared with N101.40 billion (US$261.9m) recorded in the corresponding year of 2019.

In addition, financing cost rose by 97% to N3.582 billion (US$9.2m) compared to N1.817 billion (US$4.6m) recorded in 2019.

The company ended the period with a profit after tax of N1.672 billion (US$4.3m), plunging by 60% from N4.252 billion (US$10.9m) recorded in 2019.

Operating Expenses increased by 4.6% to N23.8bn (US$61.4m) from N22.7bn (US$58.6m) recorded in 2019.

The increase was driven by pressure across Marketing & Distribution Expenses and Administrative Expenses with both increasing by 3.6% and 7.1% respectively to N16.7bn (US$43.1m) and N7.1bn (US$18.3m).

Consequently, EBITDA was down 8.6% to N13.0bn (US$33.5m) from N14.1bn (US$36.4m) in the nine months period 2019.

The brewer was recently seeking to raise up to N5 billion (US$12.9m) via Series 1 and Series 2 Commercial Paper (CP) under its N10 billion (US$25.8m) CP programme, to support the company’s short-term funding requirements.

The series 1 has a tenor of 180 days and a yield of 6.0 per cent, while the Series 2 has a tenor of 270 days and a yield of 6.5 per cent.

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