New levy impacts on Guinness Nigeria balance sheets as revenues decline 4%

NIGERIA – Guinness Nigeria Plc, a  subsidiary of United Kingdom-based Diageo Plc, has reported a 4% decline in net sales for the third quarter during its nine-months to the end of March 31st 2019.

The beverage manufacturer recorded US$93.37 million (N33.6bn) in net sales in the third quarter and US$281.28 million (N101.4bn) in nine months which was attribute to the decline on continued challenging operating environment in the lager segment.

Growth in Spirits, Guinness and non-alcoholic Malta Guinness was also offset by the impact of increased excise duty on value spirits and stiff competition from other producers including Nigerian Breweries Plc and International Breweries Plc.

Despite the cost of sale remaining flat during the nine months period, operating profit declined by 31.3% to US$20.25 million (N7.3bn) from US$29.4 million (N10.6bn) in 2018 while net profits fell 16.45% from US$13.87 million N5bn in the previous year.

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Guinness Nigeria explained that productivity initiatives around marketing spend and distribution expenses previously introduced mitigated some of the inflationary cost of sales pressure, a report by Beverage Industry News reveals.

The company also benefitted greatly from a 61% decrease in net finance cost in the nine months, driven by the US$110.96 million rights issue it initiated in 2017.

Commenting on the results for the quarter, Baker Magunda, Managing Director, Guinness Nigeria Plc noted, “In the quarter ended 31st March 2019, Guinness Nigeria delivered results which reflect the continued difficult operating environment.

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

“These developments re-affirm our Total Beverage Alcohol portfolio strategy as a key driver of sustainable growth in the market and we will continue to focus on our strategy.

“Whilst we are conscious of the continued tough operating environment with double digit inflation and pressured consumer spending, we remain optimistic about the execution of our strategy for the remainder of the 2019 financial year.”

Additionally, Mr. Babatunde Savage, Chairman of the Board of Guinness Nigeria Plc, noted that the board remained confident on the company’s investments and growth strategy.

He further stated that “the board continues to support the management in its efforts to build a business that aims to consistently deliver growth for stakeholders” adding that the firm is “making the right investments in the company to ensure long term competitiveness”.

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