By Dipo Olowookere
The board of Guinness Nigeria Plc, a leading beverage and alcohol company in the country and a subsidiary of Diageo Plc, on Thursday released the firm’s unaudited results for first half year period ended December 31, 2019 to the Nigerian Stock Exchange (NSE).
An analysis of the results showed that the revenue generated by the brewery giant slightly increased by one percent to N68.3 billion from N67.8 billion in the prior comparable period as strong growth in the second fiscal quarter mitigated the decline from the first quarter.
Business Post observed that in Q2 2020 of the company’s present fiscal year, revenue rose to N41.2 billion from N39.7 billion in the same time of 2019 and from N26.9 billion in Q1 2020.
The growth recorded in the second quarter was mainly driven by strong double-digit growth in Brand Guinness and mainstream spirits. Together with growth in the RTD segment, this mitigated the impact of increased excise duty, and the impact of reduced exports on malts.
The cost lines grew in low single digits as improved productivity and volume driven cost absorption mitigated inflationary pressure. The company’s marketing increased as it continued to focus on growing brands in line with strategy.
Operating profit declined by N1.0 billion to N3.6 billion from N4.6 billion mainly due to the impact of the excise duty increase, while profit before tax decreased by N1.9 billion to N1.9 billion from N2.6 billion, with the post-tax profit going down to N1.3 billion from N1.7 billion driven by an increase in net financing costs related to short term loans.
Speaking on the announcement, Managing Director/CEO of Guinness Nigeria Plc, Mr Baker Magunda, stated that, “In the half year ended December 31, 2019, Guinness Nigeria delivered results that reflected a very strong second fiscal quarter performance despite continued regulatory, competitive and inflationary challenges in the operating environment.
“Strong growth in Guinness, spirits and RTDs together with cost benefit from various productivity initiatives has helped to mitigate other risks.
“I am pleased that revenue growth is in line with our strategy driven by better commercial execution and innovations.
“Within the period, we continued activating several innovations such as Guinness Smooth, Guinness Gold, Baileys Delight, Orijin Gin, Singleton and Johnnie Walker Green label.
“These have contributed significantly to the growth. Despite the increase in excise duties on beer and mainstream spirits, the competitive environment was such that there was lack of pricing opportunities in the period to mitigate this.”
“Looking forward, we will continue to drive our strategy which has deliberate focus on key categories, 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 2020 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 his part, Chairman of the board of Guinness Nigeria Plc, Mr Babatunde Savage, said, “The board is confident that our strategy is sound, and we are making the right investments in the company and brands to ensure long term competitiveness.”
He further stated that “the board continues to support the management in its efforts to build a business that aims to consistently deliver growth for stakeholders.”
Adedapo Adesanya