• Friday, June 21, 2024
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Guinness Nigeria posts N62bn loss despite price hikes

Guinness stops importation of premium spirits to reduce FX exposure

Despite the increase in price, Guinness Nigeria reported an after-tax loss of N61.7 billion for the nine-month period ended March 31, 2024 from a profit of N5.9 billion in the same period of 2023.

The brewer recorded 28 percent growth in revenue to N220.3 billion compared to N172.5 billion in the same period last year.

“Guinness’ third quarter, 2024 performance was underwhelming. The company reported a Q3’24 loss-before-tax of N56 billion despite solid results on the topline. The topline growth was driven majorly by upward price adjustments as average product prices rose by 43 percent ytd across the firm’s beer and mainstream spirit segments during the period,” FBNQuest analysts said in a statement.

The analysts said the spike in net finance cost was primarily due to unrealised FX loss of about N32.1 billion. “Net-debt dropped by 2.8 percent year-to-date N29 billion due to a 38.2 percent decrease in borrowings despite a reduction of 25.7 percent year-to-date in the company’s cash balance.”

Adebayo Alli, managing director/CEO of Guinness Nigeria Plc said in a note that while the current macroeconomic environment will continue to present challenges, “I am confident in the resilience of our business and our ability to navigate the volatility. Our focus remains steadfast on innovation, and stepping up operational excellence to meet our consumers’ evolving tastes and preferences.

“Furthermore, the company intensified its focus on consumer engagement and trade support, leveraging its digital platforms. Notably, categories such as non-alcoholic malt, ready-to-serve beverages, and international premium spirits witnessed substantial revenue growth, underscoring the effectiveness of these strategies,” he said.

Earlier in May, Guinness Nigeria, implemented a price increase on all its products which was ascribed to rising cost of production and cost of doing business.

Guinness Nigeria said in a notice titled, “Price Increase by Guinness Nigeria Plc – Selected Brands,” which was signed by its Ag. commercial director, Olusanya Adesanya, that the new range of prices would take effect from today.

“Following the prevailing economic realities which have impacted significantly on the costs of our production materials and cost of doing business, this is to inform you that we plan to take a price increase on selected SKUs in our Beer and MSS category,” Guinness Nigeria said.

“This new price structure will be effective from Wednesday, March 13, 2024, (Go-Live date) and further details will be communicated subsequently,” it said.

Guinness further told its customers to, “please note the following conditions regarding the price increase. Maximum purchase volume before price increase at old pricing is capped at one-week depletion subject to stock availability.

Affected products are Guinness Stout, Guinness FES, Guinness Smooth, Malta Guinness, Dubic Malt, Smirnoff Ice, Orijin, Orijin Bitters, Gordon’s Pink Berry, Gordon’s Sunset Orange, Gordon’s Moringa Citrus, Smirnoff X1 Smooth and Choco, Captain Morgan and Orijin Herbal Gin.

Guinness price of about N500 now sells for N800 and N900, indicating 80 percent increase. Big stout retails N1000 from N700 which is a 43 percent increase.

Trophy’s price increased by 40 percent to N700 from N500 while Guilder retails N1000 from N600 indicating 67 percent increase.

Guinness Nigeria, a Nigerian-based subsidiary of Diageo Plc of the United Kingdom, was incorporated in 1962 with the building of a brewery in Ikeja. The brewery was the first Guinness operation outside Ireland and Great Britain. Other breweries have been opened over time: Ogba brewery in 1963 and Benin City brewery in 1973.