Guinness Nigeria Reports Strong Q3, Nets N5.088bn Profit

Consolidating on its strong performance, which seems to get better each quarter since the beginning of this financial year, and helped by the success of its N40bn fresh capital raising exercise, Guinness Nigeria, on Friday indicated the possibility of its coming out of the woods by this year end.
Not only was the third quarter sales revenue better than the previous, marketing and distribution expenses was kept flat and under control, just as administrative expenses dropped, resulting in operating profit soaring by over 100%, just as finance costs fell by almost half.
According to the report presented by Guinness Nigeria, profit before and after tax was significant, resulting in Earnings Per Share of N2.32, as against the previous Q3 loss of N1.70 each.
Sales revenue for the period rose N15.611bn or 17.37% from N89.872bn to N105.483bn at the end of the third quarter ended March 31, 2018, N99.865bn of which came from within Nigeria, up from N84.998bn or over 95%; while export fetched N5.618bn, as against N4.874bn.
Cost of sales at N69.898bn increased by N11.274bn, or 19.23%; resulting in gross profit of N35.585bn, which was N4.448bn or 13.88% better than the previous N31.247bn.
Other income fell to N448.962m from N566.456m, mainly from N294.779m from operating lease income, up from N184.82m; and N154.183m from the sale of by-products. Guinness Nigeria recorded N228.068m as gain on disposal of property, plant and equipment last year, but there was nothing of such in the review period. Marketing and distribution expenses was flat at N18.552bn, compared to N18.511bn Guinness Nigeria reported in the corresponding nine months of 2017. A breakdown shows that marketing expenses increased to N9.041bn from N7.803bn; while distribution expenses dropped to N9.51bn from N10.707bn.
Administrative expenses dropped by N2.308bn or 25.33% from N9.11bn in the previous Q3, to N6.802bn; resulting in operating profit of N10.679bn, representing a robust N6.487bn or 154.75% jump from just N4.192bn in 2017Q3.
Finance income for the period was flat at N2.206bn, marginally better than the N2.017bn reported for the prior Q3, comprising interest income on bank deposits, which fell to N190.859m from N228.086m; just as gain on foreign exchange transactions increased to N1.906bn from N1.63bn; and total interest income arising from financial assets not measured at fair value through income statement dropped from N387.156m to N300.383m
Finance cost dropped by N3.68bn or 42.43% to N4.994bn, from N8.674bn; the bulk of which was the finance expense on loans and borrowings that dropped significantly from N2.806bn in the 2017Q3 to N894.511m; just as interest expense on overdraft fell to N624.279m, as against N858.218m in the prior Q3.
Interest expense on intercompany overdue debts and others fell to N666.774m from N1.412bn. Loss on foreign exchange transactions dropped to N2.699bn from N3.496bn; leaving net finance costs at N2.787bn, down from N8.567bn, representing a decline of N3.87bn or 58.13%.
Profit before tax therefore stood at N7.891bn, up from the N2.464bn reported by Guinness Nigeria in the Q3 ended March 31, 2018, from a previous loss of N2.555bn; while a tax expense of N2.803bn, up from just N90.82m in 2017, left net profit at N5.088bn, as against the N2.555bn loss.