Guinness Nigeria Plc, the country’s second-biggest brewer, has wiped off two consecutive quarters of losses with a record profit helped by resilient consumer demand and improved outlet coverage.
The brewer’s profit after tax rose to N4.04 billion for the first quarter ended September 30 2021, bouncing back from a loss of N841 million and N370 million in the same period of 2020 and 2019 respectively.
Unlike other listed companies whose financials begin January and end December of every year, Guinness has a unique calendar that begins July and ends June.
The company’s profit was boosted by the 58 percent jump in revenue to N47.4 billion from N30 billion in the periods under review.
According to Managing Director/CEO, Guinness Nigeria, Baker Magunda, the impressive growth in revenue was as a result of resilient consumer demand and improved outlet coverage, as well as benefiting from headline price increases in key brands.
“Revenue grew across all key categories driven by our strategic focus brands, Malta Guinness and Guinness, as well as double-digit growth in local and imported spirits and the ready-to-drink category,” Magunda said.
However, sales cost increased by 40 percent to N32.2 billion in the period compared to N23 billion in 2020.
Magunda explained that the increase in cost of sales was largely due to sales volume growth, inflationary pressure, a shift towards more expensive can products and forex devaluation impacting imported materials.
Marketing and distribution expenses grew 42 percent to N6.57 billion from N4.6 billion in the periods under review.
The company spent N2.3 billion on advertisement, a 15 percent increase compared to the N2 billion spent in the same period last year.
Other income also rose 19.5 percent to N247 million compared to N207 million in the same time last year. Other income refers to income from leased assets, sale of by-products, gain on disposal of property, plant and equipment.
Operating profit, a profit from business operations (before deduction of interest and taxes, jumped to N6.5 billion, about 11 times the N583 million recorded in the first quarter of the previous year.
The beer maker’s earnings per share also increased to N185 per share compared to N38 per share last year.
The beer maker was also able to cut down its finance cost by 22 percent to N1.06 billion in the first quarter compared to N1.36 billion in the same period last year. Finance income also rose 9 percent to N506 million in the period under review from N462 million a year ago.
As a result, Net finance cost plunged 38 percent to N559.5 million compared to N903.7 million a year ago
Tax expense rose to N1.9 billion this year from N524 million recorded last year.
“As a business, we will continue to remain agile in doing business in Nigeria for the consistent delivery of growth for all stakeholders. We remain conscious of the continued challenging operating environment with double-digit inflation and pressured consumer income spending. However, we continue to focus on our strategy, optimising our route to consumers, innovating at scale to satisfy our consumers and improving cost control – these elements we can control,” the company noted.