Fresh from successfully raising N40bn fresh capital by way of Rights to existing shareholders, directors of Guinness Nigeria Plc, on Friday presented its unaudited first quarter result to the Nigerian Stock Exchange (NSE), telling the story of a fresh start, with a modest net profit, as against the previous loss on the back of a 30% growth in sales revenue.
According to the result for the 2017/18 financial year, Guinness Nigeria, which had 684,494,631 units added to its outstanding shares on October 25, 2017 as a result of the rights issue, bringing total outstanding shares to 2,190,382,819 units, recorded N29.903bn revenue, as against the previous N23.018bn. Cost of sales for the period climbed from N14.682bn to N19.531bn; resulting in gross profit of N10.372bn, up from N8.335bn, representing an increase of 24%.
Other income increased to N170.452m from N99.583m, this was made up of N124.746m operating lease income, up from N51.495m; and N45.706m proceeds of the sale of by-products, which dropped from N48.088m.
Marketing and distribution expenses was kept in check at N5.951bn, as against the previous N5.423bn, comprising N2.817bn marketing expenses, up from N2.505bn; and N3.133bn in distribution expenses, which increased from N2.918bn.
Administrative expenses fell slightly to N1.941bn from N2.327bn; leaving an operating profit of N2.649bn, as against N685.06m.
Finance income also jumped from N466.731m to N1.227bn, being interest income on bank deposits which fell from N198.16m to N124.98m; and gain on foreign exchange transactions which increased significantly from N268.571m to N1.102bn.
Finance cost also jumped from N3.365bn to N3.836bn; as net finance costs dropped to N2.608bn from N2.898bn, being expense on loans and borrowing of N595.617m, down from N906.332m; interest expense on overdraft of N550.777m, which increased from N175.207m; as well as the interest expense on intercompany overdue debts and others which stood at N422.433m, as against just N46.03m.
Profit after tax for the period came to N41.396m, compared to the N2.226bn in prior first quarter, representing earnings per share of two kobo, as against the loss of 148 kobo in the corresponding first quarter of last year.
A statement on the company’s website on Friday said “the results reflected continued growth within the spirits business as well as benefit of an expanding portfolio, however this was against the backdrop of lapping the inventory reduction last year.”
The statement quoted its managing director and chief executive, Peter Ndegwa, as saying that “although trading conditions continue to be difficult, we delivered a credible performance with a Net Sales growth of 30% for the quarter. This was against the backdrop of changes in commercial footprint in the prior year as well as benefit of an expanding portfolio. We also continue to see value from our focus on Productivity in areas like sales as we empower our teams for success on the frontline as well as driving efficiencies in logistics. This has released resources that we are able to re-invest behind our brands.
“A critical part of our strategy is to expand our portfolio and as we continue to innovate with the introduction of new brands and formats, our spending on A&P is critical to driving growth not just for our innovation brands but also for our core brands like Guinness and Malta Guinness.”
Also commenting on the rights issue, the MD said: “The funds raised from the Rights Issue will be used to reduce the level of borrowings and consequently our funding cost. In particular we have used the funds to reduce our foreign currency loan by 60% which in turn will reduce the foreign currency volatility on our balance sheet.”