Guinness Nigeria Plc, an alcohol beverage firm in Nigeria, has declared an after-tax loss for the first time in three years.
The company reported an after-tax loss of N5.23 billion for the six months ending December 2023 compared to a profit of N4.02 billion in the same period the previous year, according to its most recent full-year unaudited financial statement.
Its income increased from N118.5 billion to N142.6 billion, a 20.4 percent increase.
Analysts at Cordros Research said in a note on Thursday that “although the brewer demonstrated strength in revenue growth in the period, the substantial increase in finance costs, majorly due to Foreign Exchange loss, impacted earnings in the period.”
They forecasted steady revenue growth for the business, driven by premiumization and a favorable combination of price and volume.
“However, the brewer bears a substantial risk of foreign exchange volatility, which led to the decision to suspend the importation of Diageo premium spirits,” they continued.
According to the company’s statement, financing expenses increased from N6.71 billion to N23.9 billion, a 255.9 percent increase.
Thanks to gains from the remeasurement of foreign currency reserves, finance income rose by 119.4% to N3.05 billion.
Operating expenses increased slightly from N30.7 billion to N32.1 billion, or 4.43 percent.
In a statement, Adebayo Alli, managing director and chief executive officer of Guinness Nigeria Plc, said, “While this was a commendable performance in the face of a very challenging macro environment, regrettably, the persistent devaluation of the naira led to a substantial (N18 billion) unrealised foreign exchange loss, which caused a 161 percent decline in profit before tax, closing the half-year at a loss of N4.4 billion.”
The business’s board chairman, Omobola Johnson, stated that the board is still confident in the well-thought-out strategy in spite of the substantial macroeconomic hurdles the company faces.
She then on, “We will keep helping management execute the plan in a way that benefits all stakeholders in the long run.”
Guinness’s other income increased to N2.51 billion from N954.4 million, a 33.0% increase in cost of sales. While net cash from investing activities saw a loss of N2.79 billion and net cash from financing showed a negative value of N13.9 billion, net cash from operating operations saw a gain to N49.5 billion.
Cash and cash equivalents held by the corporation increased to N92.1 billion from N69.10 billion.
In October of last year, Guinness declared that, as of April 2024, it will no longer be importing or distributing specific Diageo international premium spirits.
It claimed that by stopping to import spirits from the international alcoholic beverage corporation, it would need less foreign exchange.
Additionally, Diageo will open an office in Nigeria this year as a result of the suspension of its spirit imports.
Diageo’s new venture in Nigeria will only deal with spirits. The brand’s well-known items include Baileys, Singleton, and Johnnie Walker, among others.