Guinness Nigeria Plc, a subsidiary of Diageo Plc, in its recently released half-year (H1) financial results for the period ended December 2022 reported a profit after tax of N4.02 billion, a 54.4 percent drop from N8.88 billion in December 2021.
The drop in profit can be attributed to the rising cost of doing business in Nigeria, characterised by rising inflation which impacted the firm’s cost of sales and operating expenses, and the high-interest rate environment which caused finance costs to spike during the period.
The cost of sales reported by Guinness grew by 4.9 percent to N72.2 billion in the period that ended December 2022 from N72.6 billion in the same period of 2021, thereby accounting for 64 percent of the total revenue reported during the period.
Read also: CBN grants RoutePay licence to provide digital payment solutions
The total revenue reported by the firm amounted to N118.5 billion in the period that ended December 2022 coming from N109.1 billion in the same period of 2021, of which local and export sales amounted to N117.25 billion, and N1.2 billion respectively.
Furthermore, the company’s marketing and distribution expenses increased to N21.93 billion in the period that ended December 2022 from N18.83 billion in the period of 2021, with marketing expenses accounting for the larger chunk of the amount reported.
In a similar vein, administrative expenses grew by 61 percent to N8.77 billion in the period that ended December 2022 from N5.46 billion in December 2021.
The beer maker saw its finance income and finance costs surge by 119.6 percent and 437 percent respectively in the period that ended December 2022 on the back of rising interest rates.
Finance income grew to N1.39 billion in the period that ended December 2022 from N633 million in the corresponding period of 2021, while finance costs spiked to N6.71 billion in the period under review from N1.25 billion in the same period of 2021.
Guinness’s total assets increased by 11 percent to N222.6 billion in December 2022 from N199.7 billion in December 2021, while its total shareholder’s funds declined by 5.97 percent to N78.62 billion in the period ended December 2022 from N83.6 in December 2021.
Cash generated from its core business activities declined by 53.19 percent in the period that ended December 2022 to N8.84 billion from N18.87 billion in the corresponding period of 2021.
Furthermore, the financial data shows that the beer makers’ net cash generated from investing activities for the period was negative, amounting to N2.09 billion in the period ended December 2022 largely due to the acquisition of property, plants, and equipment during the period.
Net cash flow from financing activities was also negative, totaling N10.49 billion during the period due to the payments and repayments of dividends and loans/ borrowings during the period.
Consequently, cash and cash equivalents for the period ended December 2022 amounted to N65.42 billion, 10 percent up from N59.23 billion in the same period of 2021.
Guinness Nigeria Plc reported earnings per share of N184 per share in December 2022, 54 percent lower than N403 per share in December 2021.
