Guinness Nigeria bounces to productivity on 54% revenue jump
Guinness Nigeria, a subsidiary of Diageo Plc and one of Nigeria’s leading total beverage alcohol companies, has returned to profitability after a hard 2020 as improved sales helped boost profit.
The brewer reported a 110 percent jump in profit after tax in the first half of 2021 to N1.26 billion from N12.58 billion loss recorded in the corresponding period of 2020.
Analysis of the financial result by Guinness Nigeria for the period ended June 30 2021 revealed the Lagos-based company grew its revenue by 54 percent to N160.42 billion from N104.38 billion in the comparable period of last year.
“The performance of fiscal 2021 showed that the business delivered growth despite the challenging external environment characterized by COVID-19 restrictions and high inflation,” Baker Magunda, Managing Director/CEO, Guinness Nigeria Plc, said.
The consumer goods firm came under pressure in the first half of 2020 as Nigerian consumers held back spending and adjusted their consumption patterns in light of the coronavirus impact on their income.
But, with full re-opening of the Nigerian economy following the government’s ease in lockdown restrictions, Guinness Nigeria and other industry players have seen an increase in sales amid the gradual rise in consumers’ purchasing power.
The half-year financials of Guinness Nigeria revealed that most of its revenue generated in the review period came from domestic sales of its product. The company generated N158.95 billion from Nigeria compared to the N1.47 billion obtained from the proceeds of export.
Nigeria is the company’s primary geographical segment as over 99 percent of the company’s revenue is earned from sales in Nigeria. All of the company’s revenue is derived from the sale of similar products with similar risks and returns.
Incorporated in 1962, the Lagos-based company engages in brewing, bottling and marketing of alcoholic beverages with product brands that include Johnnie Walker Black, Johnnie Walker Red, Johnnie Walker Blue, Baileys, Smirnoff Vodka, Ciroc, Orijin Bitters, Master’s Choice, Guinness Foreign Extra Stout, Guinness Extra Smooth, Malta Guinness, Malta Guinness Low Sugar, Harp Lager, Smirnoff Ice and among other products.
A breakdown of the company’s 2021 half-year financial showed it, however, reported a 53.69 percent jump in its cost of sales to N114.71 billion from N71.05 billion.
The increase in sales pushed up gross profit by 37.14 percent to N45.71billion compared to N33.33 billion in the periods under review.
While Guinness Nigeria may have returned to profitability in the first half of 2021, the company’s financial results showed its N1.26 billion profit in the review is still far behind the N5.48 billion reported in 2019 before the pandemic.
Meanwhile, in 2017 a similar year to 2021, a period after Africa’s largest economy exited recession, Guinness Nigeria reported a report of N1.92 billion, higher than the 2021 figure by N660million.
Going into the new fiscal year, the company’s Managing Director said Guinness Nigeria will be conscious of the continued challenging operating environment with double-digit inflation and pressured consumer income spending.
“However, we will continue to focus on our strategy – optimising our route to consumers, innovating at scale to satisfy our consumers and improving cost control – as we continue to emerge stronger from the current crisis. We remain confident about the execution and resilience of our Total Beverage Alcohol strategy as a key driver of sustainable growth in the market”, Magunda, said.