Despite a marginal drop in sales revenue in the half-year ended December 31, 2018, directors of Guinness Nigeria Plc, on Wednesday presented its unaudited financials, showing that profit before and after tax rose during the period, helped by the 72.78% reduction in net finance cost.
Sales revenue for the period dropped 3.92% from N70.557bn to N67.796bn; even as cost of sales stood at N47.301bn, as against the N46.562bn recorded in the prior half year; following which gross profit dropped by 14.59% to N20.494bn, compared to the previous N23.994bn.
Other income for the period rose 72.02% from N274.649m to N472.458m; just as marketing and distribution expenses fell 10.48% from N12.883bn in 2017, to N11.533bn; while administrative expenses remained flat at N4.775bn, compared to previous N4.737bn.
Operating profit fell by 29.92% to N4.658bn from N6.647bn; finance income fell 59.02% from N1.686bn to N691.176m; finance costs dropped to N1.536bn from N4.792bn, representing a 67.94% dropped. This resulted in net finance cost dropped to N845.375m from N3.106bn.
This resulted in profit before tax of N3.792bn, 7.1% better than the previous N3.541bn; just as a 13.98% drop in tax expenses from N1.411bn in the 2017 half year to N1.213bn; bringing profit before tax to N2.579bn, 21.06% up from N2.13bn. Earnings Per Share therefore climbed to N1.18 from N0.97 per share.
A statement by Viola Graham-Douglas, Director, Corporate Relations, Guinness Nigeria, explained that the profit for the period was driven by lower finance charges, due to the recently concluded rights issue, which more than offset operating profit decline in a challenging operating environment.
According to her, “net sales declined four per cent in the half year ended 31st Dec. 2018 and this was primarily driven by the ongoing pressure in the lager segment as a result of the continued challenging operating environment.
“Double digit growth in spirits and continued growth in Guinness mitigated some of the decline in the period.’’
Operating profit, she continued, “declined N2 billion as the productivity initiatives around marketing spend, distribution expenses and administrative expenses mitigated some of the inflationary cost of sales pressure.”
Also, Baker Magunda, the company’s Managing Director, said the results reflected the continued challenges in the operating environment, and that “while lager remains a challenged sector, Guinness and spirits recorded strong growth and our non-alcoholic malt drinks grew in the face of intense competitive pressure.
“This re-affirms our Total Beverage Alcohol portfolio strategy as a key driver of sustainable growth in the market.
“Looking forward, we will continue to focus on our strategy which is now based on four strategic pillars of growing our premium core faster, delivering our target cost absorption, continue innovating to meet consumer needs and driving productivity harder to improve performance in the business.”
Magunda said Guinness Nigeria was conscious of the continued challenging operating environment with double digits inflation and pressured consumer spending, amidst optimism about the execution of strategy for the remainder of the 2019 financial year.
Babatunde Savage, the chairman expressed the board’s confidence that the company’s strategy was sound and would make the right investments to ensure long term competitiveness.
He said: “The Board continues to support the Management in its efforts to build a business that aims to consistently deliver growth for stakeholders.’’
