• Thursday, May 23, 2024
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BusinessDay

Guinness Nigeria profit declines as consumer spending squeezed

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Guinness Nigeria, the nation’s second-largest brewer, said nine-month profit declined 18 percent as weak consumer spending stifled growth.

Net income fell to N7.6 billion ($48.3 million) in the nine months through March, compared with N9.3 billion a year, the local unit of London-based Diageo Plc said Tuesday in a statement on the Nigerian Stock Exchange website. Revenue climbed 3 percent to N94.9 billion, while cost of sales increased 7 percent to N48.2 billion.

Inflation in Africa’s most populous nation raised raw material costs and crimped consumer spending on beer and non-alcoholic beverages, Guinness Nigeria Chief Executive Officer Seni Adetu said on a conference call in February. The company’s management is scheduled to host a call with analysts at 2 p.m. local time in Lagos, Nigeria’s commercial capital.

“It would appear that the company has not yet recovered from the squeeze on household wallets that affected most consumer names last year and brought about a slowdown in beer consumption,” Tunde Abidoye, a Lagos-based analyst at FBN Capital Ltd., wrote in an e-mailed note.

“In addition, we feel Guinness Nigeria’s beer volumes are seeing increasing competition from both traditional rivals such as Nigerian Breweries Plc as well as SABMiller Plc, which is making in-roads into the low-end segment of the Nigerian beer market.”

Guinness Nigeria’s share price was unchanged at N280 at 12:03 p.m. in Lagos trading.

The stock has increased 1.8 percent this year, compared with a 28 percent gain on the Nigerian Stock Exchange All-Share Index.