The year ended June 2020 is one that Guinness Nigeria Plc will not forget so soon, following a loss of N12.58 billion, that’s the first of its kind in the last nine years, as the COVID-19 pandemic took a toll on the beer maker.
Profit slumped by 129 percent from N5.48 billion earned in 2019 for the same period.
The loss reported in this period is 523 percent higher than the loss of N2.01 billion recorded during the 2016 recession.
Guinness shares are down 64 percent this year and opened lower at N14.15 per share Monday. Nigerian stocks are down 5 percent this year.
Guinness Nigeria plc had earlier reported in July 2020 that the impact of COVID-19 pandemic on economic activities and the asset impairment would affect its profitability in its financial year ended June 2020. Weaker consumer purchasing power meant Guinness sold less in the period.
The numbers show the slump in profit was also due to impairment losses on property, plant, and equipment.
The company identified and wrote-off assets which were seen as obsolete, idle or damaged and this amounted to a loss of N11.7 billion.
The 21 percent decline in revenue was bigger than the 13.9 percent decline recorded during the 2016 economic recession.
Revenue for the year ended in 2020 declined to N104 billion from N131 billion while in 2016 it declined to N101 billion from N118 billion in 2015.
Nigeria represents the primary geographical segment for Guinness Nigeria plc and over 99 percent of the company’s revenue is earned from sales in Nigeria.
Sales in Nigeria plunged 17.9 percent to N102 billion in 2020 from N124 billion in 2019 while company’s exports fell 72.4 percent to N1.79 billion from N6.51 billion in 2019.
Source: Guinness Nigeria Plc financial statement for the year ended June 2020
Source: Guinness Nigeria Plc financial statement for the year ended June 2020
The company was not exactly cost efficient as finance cost also experienced a surge during the period.
The bulk of finance cost was attributed to expense on loans and borrowings amounting to N2.9 billion, 73.6 percent higher than the N1.72 billion recorded in 2019.
Expense on loans and borrowings made up 65.6 percent of the total finance cost and was followed closely by a loss on re-measurement of foreign currency balance which made up 16.3 percent of total finance cost.
The loss incurred on re-measurement of foreign currency balance reveals the negative impact of Nigeria’s currency devaluation as a 259.8 percent increase in this loss was recorded year-on-year to N741 million from N206 million in 2019.
Also, the allowance for loss of trade and other receivables in impairment movement was increased by 591.8 percent to N2.3 billion from N335 million in 2019.
Guinness was however not the only player in the breweries industry affected by COVID-19 pandemic.
Nigerian Breweries plc did not report a loss but experienced a plunge in profit of about 57.4 percent in the first half of 2020, as profit fell to N5.7 billion from N13.3 billion in the first half of 2019.
International Breweries plc on the other hand reported a loss in the first half of 2020, which was 36.8 percent higher than the loss reported in the first half of 2019, as loss worsened to N9.4 billion from N6.8 billion in first half of 2019.
The performance of Guinness Nigeria plc in the just released financial statement for the year ended June 2020 affected their share price as the market opened at N15.6 but fell to N14.15 at the close of business.
They have however, noted that their balance sheet remains strong, and this gives the Board the confidence that the Company has the right resources to continue to deliver the strategy.
