Guinness Nigeria stung by currency woes as firm declares fourth consecutive loss

Guinness Nigeria Plc on Wednesday reported a strong revenue growth of 29% to ₦90bn in the 9-months to 31 March 2017, up from ₦70bn in the previous year.

However, the company was stung by an inflationary environment and continuing currency devaluation which drove up the cost of goods sold by 47% to ₦60bn. A higher net finance cost that rose 177% to ₦6.7bn due to unrealized foreign exchange loss added to the brewer’s woes

The result was a net loss of ₦2.6bn. It would be the fourth consecutive loss for the brewer which has been challenged by a difficult macroeconomic environment of cash shortages and foreign currency scarcity, lower consumer demand, among others.

Speaking on the results, Guinness Nigeria’s Managing Director and Chief Executive Officer, Mr. Peter Ndegwa, said:

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 benefited 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.

In December, Guinness Nigeria sought to recapitalize its business through a rights issue; and in March, it sought approval from the Nigerian Stock Exchange to raise ₦39.77bn ($130m) through a discounted share sale to its existing shareholders.

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