NIGERIA –  Guinness Nigeria Plc has reported a 21% growth in its net profits to US$ 7.2 million (N2.6billion) during its first half year period ending 31st December 2018 driven by a sharp decline in net finance charge by 73% to US$2.34 million, reports Beverage Industry News.

The beer manufacturer said that lower finance charge was as a result of the rights issue it initiated in 2017 adding that this offset more than 30% of its operating Profit despite a challenging operating environment.

However, during the period under review, the company recorded a 4% decrease in net sales hitting US$190 million which was caused by the ongoing pressure in the lager segment as a result of the continued challenging operating environment.

The company noted that the double digit growth in spirits and continued growth in Guinness stout mitigated some of the decline in the period.

Viola-Graham Douglas, Guinness-Nigeria Corporate Relations Director, said that gross profit sank 15% as a result of decrease in net sales as well as continued inflationary pressure on raw material costs and lower fixed cost absorption.

She added that marketing spend decreased 10% as the company continued to focus its investment behind the biggest growth opportunities.

“Operating profit declined US$5.54 million as the productivity initiatives around marketing spend, distribution expenses and administrative expenses mitigated some of the inflationary cost of sales pressure,” she said.

Baker Magunda, Managing Director, Guinness Nigeria Plc, while commenting on the results pointed out that continued challenges in the operating environment has had a negative implication on the business.

“While lager remains a challenged sector, Guinness and spirits recorded strong growth and our non-alcoholic malt drinks grew in the face of intense competitive pressure.

This re-affirms our Total Beverage Alcohol portfolio strategy as a key driver of sustainable growth in the market,” he said

Magunda said that the company was conscious of the continued challenging operating environment with double digits inflation and pressured consumer spending.

“Looking forward, we will continue to focus on our strategy which is now based on four strategic pillars of growing our premium core faster, delivering our target cost absorption, continue innovating to meet consumer needs and driving productivity harder to improve performance in the business,” he added

He, however, said that Guinness Nigeria remained optimistic about the execution of strategy for the remainder of the 2019 financial year.

Babatunde Savage, Chairman, Board of Guinness Nigeria Plc, said the Board was confident that the company’s strategy was sound and would make the right investments to ensure long term competitiveness.