• Friday, May 24, 2024
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Guinness records biggest loss since 2016 in Q3 on rising sales cost

Guinness Nigeria clears losses with record profit

Guinness Nigeria Plc, the country’s second- biggest brewer, has posted its biggest loss since 2016 in Q1 despite being able to boost sales.

The brewer recorded a loss of N841 million for the first quarter ended September 30 2020, 127 percent worse than a year ago when it posted a loss of N317 million.

Unlike other listed companies which financials begins January and end December of every year, Guiness has a unique calendar that begins July and ends June.

Shares of Guinness remained flat at N17 per share at close of market, Monday.

Cost of sales is up 21.6 percent to N23 billion in Q1, compared to N18.6 billion in the same quarter last year.

Analysts at CSL Stockbrokers noted that while the surge in cost of Sales partly reflects recovery in volume, the faster than revenue cost growth gives some concern given commodity prices (particularly barley) distributors implemented in remain significantly below November 2019 and Februpre-pandemic levels. ary 2020.

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According to the analysts, The faster rise in cost of “although the rise in carriage sales drove gross profit down costs due to supply chain to N7 billion in Q1 2020 from disruption and impact of FX N7.9 billion in the first quardevaluation on naira might ter of 2019. Finance cost also have added to cost but it is increased by 6 percent to N1.36 inadequate to account for the billion from N1.28 billion rehigh cost growth. corded in Q1 2019 while fi

“The company’s inventory nance income rose to N234.7 recognition policies must have million compared to N462 impacted Cost of Sales recogmillion a year ago. nition in Q1.” Revenue surged Guinness increased loans 11 percent to N30 billion in and borrowings by 41 percent Q1 2020 from N26 billion a to N548 million compared year ago. to N385 million in the same

This is also a 259 percent period last year. surge from N8.4 billion in the Guinness recorded a tax exlast quarter. This signals a repense of N524 million in Q3’20 covery back to pre-pandemic while there was no tax expense levels. recorded in Q3’19.

Analysts at CSL StockbroThe faster rise in cost of kers think the recovery comes sales drove gross profit down on the back of lifting of the to N7 billion in Q1 2020 from ban on gatherings and the N7.9 billion in the first quarter consequent resumption in of 2019. social activities and opening Operating profit, a profit of on-trade channels like bars from business operation beand clubs. fore deduction of interest and

According to them, revtaxes, fell by 13 percent to N586 enue growth was also aided million from N681 million a by the price adjustments to year ago.