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FY 2022: Guinness Nigeria reports 54% decline in Profit to N4.02bn

By Philemon Adedeji

Amid macroe conomics headwinds, Guinness Nigeria plc, a listed company on the Nigerian Exchange Limited (NGX), known as a subsidiary of Diageo Plc, has released its audited financial statement ended December 31st, 2022, the group reported 54.42 declined in Profit to N4.02 billion in full year 2022 from N8.82 billion accounted in the comparable period.

The slowdown in profits was due to the increase in the cost of sales as well as indirect expenses for the period.

Guinness Nigeria Profit Before Tax stood at N7.23 billion as of end of December 2022, in contrast from N12.97 million recorded during the corresponding period of 2021, representing a decline of 44 per cent.

From the data submitted to the floor of Nigerian Exchange Limited (NGX) showed that the group revenue surged by 9 per cent to N118.45 billion in 12 months of 2022 from N109.12 billion in 12 months of 2021.

According to the financial statement of the company, the disaggregation of revenue from contracts with customers from Nigeria and export is valued at N117.25 billion and N1.20 billion respectively from N108.04 billion and N1.09 billion.

The results statement noted that gross profit grew 16 per cent, as revenues grew by 9 per cent ahead of the 5 per cent increase in cost of sales, driven by inflation and the impact of naira devaluation on imported materials in the half- year under review.

Earnings Per Share (EPS) recorded for the period dropped by 54.34 per cent from N403 in financial year 2021 to N184 in financial year 2022.

Speaking on the announcement, Managing Director/CEO, Guinness Nigeria Plc, Mr. John Musunga said, “In the half year ended 31st December 2022, Guinness Nigeria delivered results that reflected the continued regulatory, competitive and inflationary challenges in the operating environment in Nigeria. The period was characterised by challenges such as escalating inflation, dwindling consumer disposable income and a worsening foreign exchange situation.Despite these challenges, the business recorded good progress against our strategic focus brands.

“Despite lapping a strong quarter in 2021, revenue grew by 9 per cent, benefiting from price and mix optimisation, as well as reflecting resilient consumer demand and improved outlet coverage as we continue to optimise our route to consumer. Revenue grew across most categories, driven by our strategic focus brands, Guinness, Ready-to-Serve and Spirits. Malta Guinness was flat on previous year due to the impact of increased pricing in response to the higher inflationary pressure on packaging costs,” he said.

Expatiating, he said, “Marketing expenses increased 7 per cent, as we increased marketing investment to support our strategic growth priorities and target market share improvement. Distribution expenses increased 28 per cent, driven by increase in the price of diesel, other haulage inputs and asset replacement cost. Despite all the above, the company delivered N12.6 billion operating profit.”

Musunga noted that the continued devaluation of the Naira resulted in a 758 per cent increase in net financing costs, due to the revaluation of the hard currency debt.

However, finance income increased by 121 per cent on account of higher yields from short-term cash investments. Lower corporate tax is driven by the reduction in pre-tax profits.

“Looking forward, we will continue to drive our strategy which has deliberate focus on key categories, exploding Guinness growth, growing spirits faster, continuing to innovate to meet consumer needs, and driving productivity. Whilst we are conscious of the continued challenging operating environment with double digit inflation, and pressured consumer spending, we are positive about the execution of our strategy for the remainder of the 2023 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 added.

On her part, Chair of the Board of Guinness Nigeria Plc, Dr Omobola Johnson said, “The Board is confident that our strategy is sound, and will in the long term continue to drive value to all stakeholders.”

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