Guinness Nigeria reports 18% decline in full year profits to US$15.15m

NIGERIA – Guinness Nigeria, a subsidiary of Diageo Plc, reported 18 percent drop in net profits for full year profits for the financial year ending June 2019 to N5.5 billion (US$15.15 million).

The company’s revenues also declined to N131.50bn (US$362.26m) for the period, compared to the N141.96bn (US$ 391.07m) recorded in the same period in 2018 “on the backdrop of an extremely challenging macroeconomic and competitive environment.”

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Managing Director, Guinness Nigeria Plc, Mr. Baker Magunda, also attributed the decline to a combination of factors such as inflation, prior year royalties and accruals not approved by National Office for Technology Acquisition and Promotion

“The cost of the increase in excise duty at a time of stagnant consumer disposable income had to be absorbed by industry players,” he added.

However, he stated that the company will continue to work on all operating indices while expecting that the micro and macroeconomic parameters improve.

Amidst the challenges Guinness put in place strategies of reducing its operation cost by cutting spending on marketing and distribution operations.

 Mugunda explained that a 16 percent reduction in marketing expense as well as distribution costs initiatives partly mitigated the gross profit decline.

“This led to a fall in operating profit by N4.4billion (US$12.13m). Profit before tax decreased by N2.8 billion (US$7.71m) as a 46 per cent reduction in net finance costs further helped to cushion the decline in operating profit,” Magunda explained.

 “Despite the tough competitive landscape, we continue to see good growth performance from Guinness, Spirits and the malt drinks.” He added

Commenting on the Results, Mr. Babatunde Savage, Chairman of the Board of Guinness Nigeria Plc, said: “as a Board, we are confident that our strategy is sound, and that we are making the right investments in the company to ensure our long-term competitiveness.

“The Board will continue to support the management in its efforts to build a business that aims to consistently deliver growth for stakeholders.”

Guinness Nigeria Plc has declared a dividend of N1.52 per ordinary share of 50 kobo each for the 2018 financial year, which translates to N3.32bn (US$ 9.15m).

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