FX policy, economic challenges, others force Guinness to lose N2bn

Guinness Nigeria Plc has announced a loss after tax of N2.0 billion for the financial period ended June 30^th, 2016.

The loss after tax for the drink manufacturing company represented a 126 percent decline from N7.8 billion declared as profit in the corresponding period of 2015.

Guinness Nigeria released its 2016 business year results via the Nigerian Stock Exchange (NSE) website revealing a 14 percent decline in revenue of N102 billion from N118.5 billion declared a year ago.

Cost of finance increased significantly to N6.8 billion from N4.9 billion representing a 72 percent change, and resulting in a 121 percent decline from profit before tax of N10.8 billion recorded in June 2015 to a loss before ax of N2.3 billion.

In spite of the performance, directors of Guinness Nigeria recommended the payment of final dividend of N753 million from its reserves. The proposal which is subject to approval at the company’s next Annual General Meeting is 84 percent lower than N4.8 billion paid as dividend in 2015 and translates to 50 kobo in contrast to N3.20 paid in 2015.

Peter Ndegwa, Managing Director/Chief Executive Officer, Guinness Nigeria Plc whilst speaking on the results said that the combination of a tough economic environment and challenges with naira devaluation had a significant impact on Guinness Nigeria’s overall performance.

“Our performance this year was impacted by two major factors, one being the very tough economic challenges around consumer spending, driving consumer preferences towards value brands across the sector, the other, and more significant factor being the effect of FX policy and the devaluation of the Naira. When you take out the impact of the latter, our underlying performance for the year was broadly in line with the prior year in spite of the pressure on the top line.”

On a positive note, Mr Babatunde Savage, Chairman, Guinness Nigeria Plc, expressed optimism on the recovery of the company. He said: “Despite the continuing deterioration in the operating environment, the Board is pleased to note that our core brands of Guinness FES and Malta Guinness are in growth and we now have a strong participation in the growing value segment of the market through Satzenbrau and Dubic. We have also started to see early signs that our decisions to acquire the distribution rights in Nigeria to the International Premium Spirits brands of Diageo and to invest in local capacity for spirits manufacturing are the right ones for the business.”

The company’s share price dropped 7 percent or by N7 to close at N93 per share following the release of the results on Wednesday.

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