Guinness Nigeria to raise US$12.9m in series 1 and 2 of Commercial Paper programme

NIGERIA – Guinness Nigeria Plc, subsidiary of Diageo Plc and one of the leading beverages and alcohol company in Nigeria is 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.

The fund will be utilized to support the company’s short-term funding requirements, reports This Day.

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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.

The market leader in Stout segment, reported a revenue of N96.081 billion (US$248.1m) for the nine months ended March 31, 2020, showing a decline of 5.3 per cent compared with N101.402 billion (US$261.9m) recorded in the corresponding period of 2019.

Financing cost soared by 97 per cent to N3.582 billion (US$9.2m) compared to N1.817 billion (US$4.6m) in 2019. The company ended the period with a profit after tax (PAT) of N1.672 billion (US$4.3m), down by 60 per cent from N4.252 billion (US$10.9m) in 2019.

According to the Managing Director/CEO, Guinness Nigeria Plc, Mr. Baker Magunda, revenue for the year to date continues to be impacted by excise duty increases which prior to February were not covered by price.

“We remain confident however, that the underlying performance of our main strategic focus brands/categories Guinness, Malta Guinness, RTDs and spirits remains solid.”

He explained that he was pleased by the work they are doing on productivity that led to decline in the cost of sales despite the fact that Nigeria’s inflation rate at stood at 12 per cent.

The company recorded a 1.9ppts expansion in gross margin to 38.3% due to a faster decline in Cost of Sales relative to Revenue. Cost of Sales declined 8.1% to N59.3bn (US$153.1m) during the period under review.

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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.

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