• Thursday, May 23, 2024
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Guinness profit drops 5% on rising input cost, FX loss

Guinness profit drops 5% on rising input cost, FX loss

Guinness Nigeria has recorded a 5 percent drop in profit in its Q1 ended September 2023, driven by rising input costs and FX loss during the period.

The brewer’s profit after tax dropped to N2.6 billion in Q1’2023 from N2.75 billion in the same period of 2022.

Guinness Nigeria’s input cost increased by 19.6 percent to N41.4 billion in Q1’2023 from N34.61 billion in the same period of 2022.

The firm’s input cost gulped 69.5 percent of the total revenue of N59.54 billion in Q1’2023, a 400 basis points increase from 65.5 percent gulped from total revenue of N52.85 billion in Q1’2022.

Guinness Nigeria’s unrealised foreign exchange loss recorded in finance expense paid increased to N1.93 billion loss in Q1 2023 from N1.56 billion loss in the same period of 2022.

Similarly, foreign exchange loss recorded in its finance income stood at N49.43 million in Q1 2023 from a loss of N351,000 in the same period of 2022.

Read also: Guinness stops importation of premium spirits to reduce FX exposure

The brewer’s revenue grew marginally by 12.7 percent to N59.54 billion in Q1 2023 from N52.85 billion in the same period of 2022.

Revenue from Nigeria increased to N58.7 billion in Q1 2023 from N51.92 billion in the same period of 2022.

However, revenue from export sales dropped to N843.74 million in Q1 2023 from N942.18 million in the same period of 2022.

“We believe the nation’s high inflation and diminished consumer purchasing power tempered sales volumes, as consumers persist in adapting their spending preferences towards essentials. However, we believe the company’s performance will improve in the next quarter as holiday season demand drives sales,” analysts at CSL Research said in a note.

Read also: Johnnie Walker maker to establish Nigerian entity, as Guinness ends whisky sales

Guinness Nigeria has announced a strategic shift in its distribution model for imported premium spirits, effective April 2024. The company said in a statement that it will no longer import or distribute certain Diageo international premium spirits, such as Johnnie Walker, Singleton, and Baileys, as well as others included in its 2016 Sale & Distribution Agreement with Diageo Plc.

This change aligns with both Guinness Nigeria’s long-term growth strategy and Diageo Plc’s decision to establish a wholly-owned spirits-focused business to manage its premium spirits portfolio across West and Central Africa, with Nigeria as a key hub.

Guinness Nigeria’s other income grew to N1.4 billion in Q1 2023 from N660.38 million in the similar period of 2022.

Marketing and distribution expenses dropped to N8.31 billion from N9.41 billion while administrative expenses to N3.35 billion from N3.58 billion.

Read also: Guinness Nigeria reports N18.2bn full year loss despite revenue growth

The firm’s finance income dropped to N563.93 million from N597.5 million while finance expenses to N4.62 billion from N2.46 billion

Personnel expenses which include the provision for gratuity liabilities and other long-term employee benefits surged to N4.65 billion in Q1 2023 from N3.82 billion in the same period of 2022.

The brewer’s inventories are worth N34.93 billion which is driven by engineering spares which amounted to N12.41 billion, finished products which amounted to N10.1 billion, and raw materials and packaging materials which stood at N7.77 billion.

Inventories in transit amounted to N2.81 billion while products in process stood at N1.84 billion during the period.

Guinness Nigeria’s basic and diluted earnings per share increased to N119 per share from N125 per share.