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Q1’21 : Guinness Nigeria revenue surges amidst operating environment challenges

NSE: Guinness, PZ lowest performing stocks in October

By Peter Egwuatu

The shareholders of Guinness Nigeria Plc may have cause to smile as the Company had shown resilience in its financial performance by bouncing back to profitability. 

Despite the operating environment challenges, the Company  recorded improved performance in major performance indicators with its revenue growing by 58 per cent to N47.46 billion for the first quarter period ended , 30 September 2021, Q1’21 from N30,024 billion in the corresponding period, Q1’20.

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This increase in revenue was as a result of the resilient consumer demand and improved outlet coverage and proactive efforts of the management to curtail costs.

The unaudited results which were released to the Nigerian Exchange Group (NGX) revealed a 117 per cent increase in gross profit in the period, with double digit revenue growth across all key categories despite the impact of continued COVID-19 related restrictions and ongoing economic challenges. 

Other performance indicators showed that Profit After Tax, PAT grew by 580 per cent to N 4.043 billion from a loss of N841 million in Q1’20 while the pre tax stood at N5.946 billion from a loss of N317 million in Q1’21. The net financing costs decreased by 38 per cent   while distribution expenses increased 36 per cent driven by higher volumes and inflation in the period under review.

Commenting on the performance of the results, Mr. Baker Magunda, Managing Director/CEO, Guinness Nigeria said: “In the three months ended 30 September 2021, Guinness Nigeria delivered exceptional results despite the challenging external environment characterized by continued restrictions related to COVID 19, high inflation and heightening operating costs.”

“Revenue grew by 58 per cent to N47.4 billion, driven by resilient consumer demand and improved outlet coverage, as well as benefitting from headline price increases in key brands. Revenue grew across all key categories driven by our strategic focus brands, Malta Guinness and Guinness, as well as double-digit growth in local and imported spirits and the ready-to-drink category.”

“We are aware of the challenges in the operating environment, and regardless, our focus remains on delivering value to our stakeholders. This is why we continue to invest behind our strategic focus brands and categories, and to support the recovery of the on-trade, as seen in the 50% Marketing spend increase. Cost of sales also increased by 40%, largely due to sales volume growth, inflationary pressure, a shift towards more expensive can products and forex devaluation impacting imported materials” he added. 

The company also revealed that despite the devaluation of the naira, its net financing costs decreased by 38 per cent as a result of reduction in the net interest cost on the back of better cash generation; and operating profit grew 1010 per cent to N6.5 billion.

“As a business, we will continue to remain agile in doing business in Nigeria for the consistent delivery of growth for all stakeholders .We remain conscious of the continued challenging operating environment with double-digit inflation and pressured consumer income spending. However, we continue to focus on our strategy – optimising our route to consumer, innovating at scale to satisfy our consumers and improving cost control – these elements we can control.

 We remain confident in our People, and in the execution and resilience of our Total Beverage Alcohol strategy as a key driver of sustainable growth in the market.” Managing Director/CEO, Guinness Nigeria Plc, Baker Magunda said.

Meanwhile, the Chair person of the Board of Guinness Nigeria, Dr. Omobola Johnson had assured shareholders during its last Annual General Meeting, AGM  that “the Board will continue to support Management in its efforts to sustain global best practices aimed at consistently delivering business growth for stakeholders.”

“We remain confident that the strategy is comprehensive and robust, and that we are making the right investments in the company to ensure our long-term competitiveness” she said.

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