Guinness Nigeria Plc, on Wednesday said that net profit for its first-half of the year through 31st December 2018 grew by 21% to N2.6bn, helped by a sharp drop in net finance charge by 73% to N845m.

The maker of Guinness Foreign Extra Stout said that the lower finance charge was driven by the rights issue it initiated in 2017. The brewer noted that the benefits of the lower finance charge more than offset a 30% decline in Operating Profit in a challenging operating environment.

The company said that net sales in the six-months to the end of December declined by 4-percentage points to N67.8bn, negatively impacted by the ongoing pressure in the lager segment as a result of the continued challenging operating environment.

However, double digit growth in spirits and continued growth in Guinness stout mitigated some of the decline in the period.

Commenting on the results, Viola-Graham Douglas, Guinness-Nigeria Corporate Relations Director, said that gross profit declined 15% as a result of net sales decline, as well as continued inflationary pressure on raw material costs and lower fixed cost absorption.

She added that marketing spend decreased 10% as the company continued to focus its investment behind the biggest growth opportunities.

“Operating profit declined N2 billion as the productivity initiatives around marketing spend, distribution expenses and administrative expenses mitigated some of the inflationary cost of sales pressure,” she said.

Also speaking on the results, Baker Magunda, Managing Director, Guinness Nigeria Plc, said that the results reflected the continued challenges in the operating environment.

“While lager remains a challenged sector, Guinness and spirits recorded strong growth and our non-alcoholic malt drinks grew in the face of intense competitive pressure.

“This re-affirms our Total Beverage Alcohol portfolio strategy as a key driver of sustainable growth in the market.

“Looking forward, we will continue to focus on our strategy which is now based on four strategic pillars of growing our premium core faster, delivering our target cost absorption, continue innovating to meet consumer needs and driving productivity harder to improve performance in the business.”

Magunda said that the company was conscious of the continued challenging operating environment with double digits inflation and pressured consumer spending.

He, however, said that Guinness Nigeria remained optimistic about the execution of strategy for the remainder of the 2019 financial year.

Babatunde Savage, Chairman, Board of Guinness Nigeria Plc, said the Board was confident that the company’s strategy was sound and would make the right investments to ensure long term competitiveness.

“The Board continues to support the Management in its efforts to build a business that aims to consistently deliver growth for stakeholders,” he said.