Guinness Nigeria Plc, the nation’s leading alcoholic
beverage manufacturer and a subsidiary of Diageo Plc, has released its
unaudited results for the nine months ended 31 March, 2017.
The results detail revenue growth of 29% and a 6% increase
in gross profit when compared to the same nine-month period in 2016. While the
first half volume growth continued in the third quarter, the third quarter also
benefited cycling a weak third quarter last year. Cost of sales increased by
47% in the nine months due to the challenging economic environment. Finance
costs also increased significantly versus last year. As a result the financial
statement released to the Nigerian Stock Exchange yesterday included a company
loss after tax of N2.6 billion for the nine months under consideration.
Commenting on the results, Mr. Peter Ndegwa, the company’s
Managing Director and Chief Executive Officer noted that the company’s
significant revenue growth was striking in the challenging operating
environment.
"We have been able to deliver strong sales growth even in a
challenging operating environment marked by a significant erosion of consumer
disposable income.
This
encouraging result is attributable to increased volumes and the realisation of
pricing benefits. We have started to see the benefit of our broader portfolio
product offerings across beer and spirits and across an increased variety of
formats. We have also seen resilience in the performance of our premium core
brands and improving growth of our more accessible brands."
He added, "Our gross profit continues to be impacted by the significantly higher raw
material costs as a result of devaluation and the significant local input
inflation, but benefitted in the quarter from supplier rebates.The
company continues to make progress on its commitment to drive out costs across
a number of areas as shown by distribution expenses that are down 16% compared
to the previous year. Our
financing costs at N6.7 billion for the year to date include N1.9 billion of
unrealised foreign exchange losses on hard currency liabilities. As a result,
we have reported a N2.6 billion post tax loss versus a N0.9 billion profit in
the prior year."
"While we
are encouraged by the performance and results recorded this quarter, we remain
realistic in our expectations for the full year. We are however confident that
we have the right strategy to return to sustainable profitability and shall
stay focused on its efficient implementation as we drive out costs, build out
our portfolio and ensure we provide our consumers with options in the current
pricing environment ".
The company
continues to consolidate its unique position as the only Total Beverage Alcohol
Company in Nigeria.This position has been strengthened over the past year since
Guinness Nigeria acquired the right to distribute Diageo PLC’s international
premium spirits (IPS) brands, including Johnny Walker, Baileys, Ciroc Vodka and
Smirnoff Vodka in Nigeria in December 2015. Investment in its position was
further entrenched in November last year when Guinness Nigeria commissioned a
spirits manufacturing line at its Benin plant.
These
investments strengthen and capitalise on the spirits brand base of Guinness
Nigeria, allowing the business to compete across all categories of the
alcoholic beverage market thereby deepening its operations and creating the
capacity and a strong pipeline for long term growth.
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