The closure of bars, lounges and social gatherings has impacted Guinness Nigeria’s revenue and profits for the period ended 30 June (half year) 2020.
But the brewer is eyeing a rebound post-coronavirus, with focus fixed on optimising route to consumer, reduction of credit risk and management of cost control.
Its revenue dropped 21 percent to N104.37 billion for the period, from NN131.49 billion reported in the same period of 2019. The brewer incurred a loss after tax of N12.7 billion, according to audited results released to the Nigerian Stock Exchange (NSE) on Friday.
Baker Magunda, managing director/CEO, Guinness Nigeria plc, said the last quarter performance of fiscal 2020 was significantly impacted by restrictions due to COVID-19, exacerbating the already challenging economic environment.
“Closures of on-trade premises (bars, lounges, clubs and dine-in restaurants) which represent the major part of the consumption occasion for our products; and bans on celebratory occasions impacted sales,” Magunda said.
He explained that demand was also impacted by reduced consumer income, unemployment concerns due to the shutdown of a large number of businesses, and increases of VAT and excise throughout the year.
“Distribution was further impacted by the ban of inter-state, and in some cases intra-state travel. Although management worked diligently with regulatory authorities to minimise the impact, this hampered our distributors’ ability to restock and have our brands available for purchase,” he further said.
The brewer, however, said that its reaction to the challenges presented by theCOVID-19 lockdown was centered around reducing risk to the business by focusing on cash delivery, distributor inventories reduction, and fast-tracking of the ongoing distribution transformation project for efficient sales operations.
“This focus ensured a reduction of trade receivables by 88 percent over same period last year,” he stated.
“We also focused on cost management by reacting to the drop in demand by reducing operations for a month. Agile actions taken in the period impacted by COVID-19 complemented the work already undertaken throughout the year to reduce cost of sales by year end,” he explained.
He said going into the new fiscal year, the company is conscious of the continued challenging operating environment with double-digit inflation and pressured consumer income spending. However, he believes the focus put in optimising route to consumer, credit risk reduction and managing cost control would position the brewer to emerge even stronger from the current crisis.
“We remain confident about the execution and resilience of our Total Beverage Alcohol strategy as a key driver of sustainable growth in the market,” he added.
In a similar fashion, Nigerian Breweries experienced revenue decline of 11 percent to N151 billion in H1 of 2020. Profit after tax declined by 58 percent, from N13 billion in the first half of 2019 to N5.5 billion in the same period of 2020.
Also, International Breweries experienced revenue decline of 12 percent, recording N60 billion in the first half of 2020 as against the N68 billion in the previous year. It further recorded N9.3 billion in its loss after tax, representing a 37 percent increase in its loss profile.
