Despite revenue increase, Guinness profit dips amid economic downturn
Despite the economic downturn and disruptions of last year, Guinness Nigeria, one of the top brewers in Nigeria and a subsidiary of Diageo Plc, managed to shore up its revenue. However, its profit also dropped.
In its recently released financials for the period ended December 31st 2020, the brewer’s revenue grew by six percent to N72.3 billion from the N68.3 billion realized in the same period of 2019. On the other hand, the brewer’s gross profits dipped marginally by seven percent to N18.5 billion in 2020 from the N19.8 billion it achieved in the previous year. Similarly, its profit before tax dropped by 33 percent to N1.29 billion in 2020 from N1.93 billion in 2019.
The bulk of the company’s revenue was realized from the sale of its products in Nigeria valued at 71.5 billion, which was an upward tick of 9 percent from the N65.8 billion it achieved in 2019. In addition to the local sale of its products was proceeds from exports, which stood at N820 million, representing a 67 percent drop from N2.49 billion realized in 2019.
Similarly, its other incomes grew by 148 percent from N281 million in 2019 to N697 million in the reported year. This was on account of input from the firm’s operating lease income, which grew by N38million from N128 million in 2019 to N176 million in 2020. The sale of its by-products also grew by 10 percent to N161 million in 2020 from N146 million in 2019 and its gains on the disposal of property, plant, and equipment surged to N359 million from N6.9 million in 2019. However, despite the improvement in its income, its profits dipped.
After a 160 percent increase in tax payment of N1.6 billion in 2020 as against the N619 million paid in 2019, the firm eventually experienced a loss for the period reaching N317 million representing a decrease of 76 percent from the N1.31 billion profit in the same period of 2019.
Speaking on the company’s performance, Baker Magunda, the company’s CEO said, “In the half-year ended 31st December 2020, Guinness Nigeria delivered results that reflected the continued regulatory, competitive, and inflationary challenges in the operating environment in Nigeria. However, it was also significantly impacted by challenges such as the disruptions emanating from the Endsars protests, the continued restrictions due to COVID-19, which impacted a lot of consumption occasions in the December holiday season, and continued challenged consumer spending in the midst of high inflation. Despite these challenges, the business recorded good progress against our strategic focus brands.”
He also referenced reduced export opportunities that impacted the company’s sales for the period, however, the single digit growth experienced in the locally produced and imported spirits, Malta Guinness, and ready to drink brands made up for the loses, adding that with the devaluation of the Naira, the company’s financing costs increased significantly
Speaking on future performance, Magunda said, “Looking forward, we will continue to drive our strategy which has a deliberate focus on key categories, continuing to innovate to meet consumer needs, and driving productivity.
“Whilst we are conscious of the continued challenging operating environment with double-digit inflation, pressured consumer spending and the continued impact of the COVID-19 pandemic, we are positive about the execution of our strategy for the remainder of the 2021 financial year. We remain confident of the resilience of our Total Beverage Alcohol portfolio strategy as a key driver of sustainable growth in the market”, he said.