Guinness Nigeria Plc, a beverage alcohol company in Nigeria, has reported an after-tax loss for the first time in three years, according to data compiled by BusinessDay.
The company’s latest full-year unaudited financial statement shows that it recorded an after-tax loss of N5.23 billion for the six months ended December 2023 as against a profit of N4.02 billion in the same period of last year.
Its revenue rose by 20.4 percent to N142.6 billion from N118.5 billion.
“While the brewer demonstrated strength in revenue growth in the period, the substantial increase in finance costs, majorly due to Foreign Exchange loss, impacted earnings in the period,” analysts at Cordros Research said in a note on Thursday.
They projected sustained revenue growth for the company fueled by premiumisation and a favourable price/volume mix.
“Nonetheless, the brewer faces significant FX volatility risk, prompting a decision to halt the importation of Diageo premium spirits,” they added.
The company’s statement also revealed that finance expenses surged by 255.9 percent to N23.9 billion from N6.71 billion.
Finance income increased by 119.4 percent to N3.05 billion, driven by gains on the re-measurement of foreign currency balances.
Operating expenses saw a marginal increase of 4.43 percent to N32.1 billion from N30.7 billion.
“While this was a commendable performance in the face of a very challenging macro environment, regrettably, the persistent devaluation of the naira led to a substantial (N18billion) unrealised foreign exchange loss, which caused a 161 percent decline in profit before tax, closing the half-year at a loss of N4.4billion,” Adebayo Alli managing director/CEO of Guinness Nigeria Plc said in a statement.
Omobola Johnson, the company’s board chairman, said despite the significant macro-economic challenges faced by the company, the board remains confident in its well-devised strategy.
“We will continue to support management to implement the strategy in a manner that delivers sustainable value to all stakeholders,” she added.
Guinness’s cost of sales rose by 33.0 percent to N96.7 billion and other income surged to N2.51 billion from N954.4 million. Net cash from operating activities increased to N49.5 billion, net cash from investing activities recorded a loss of N2.79 billion and net cash from financing recorded a negative value of N13.9 billion.
The company’s cash and cash equivalents was N92.1 billion, up from N69.10 billion.
Last October, Guinness announced it was planning to stop the importation and distribution of certain Diageo international premium spirits effective from April 2024.
It said that its discontinuation of the importation of spirits from the multinational alcoholic beverage company would reduce its foreign exchange requirements.
Also, Diageo will be setting up a Nigerian arm this year due to the discontinuation of the importation of its spirits.
Diageo’s new Nigerian business will be solely spirits-focused. Some of the popular products of the brand include Johnnie Walker, Singleton, and Baileys and others.