Guinness Nigeria Plc said on Thursday that net sales for the third quarter and nine-months to the end of March declined by 4% respectively. The company recorded N33.6bn in net sales in the third quarter and N101.4bn in nine months.

The company blamed the decline on continued challenging operating environment in the lager segment. Consumers have been trading down to value beer, where the company has faced stiff competition from other producers – Nigerian Breweries Plc and International Breweries Plc. The company noted that growth in Spirits, Guinness and non-alcoholic Malta Guinness was offset by the struggling lager segment. Guinness said that sales have also been impacted by the increased excise duty rate on value spirits as well disruption caused by the General Election.

Explaining further, the company said that Cost of sales in the nine months were flat versus last year while operating profit declined by 31.3% to N7.3bn from N10.6bn in 2018. Guinness Nigeria noted that productivity initiatives around marketing spend and distribution expenses previously introduced mitigated some of the inflationary cost of sales pressure. The company benefitted greatly from a 61% decrease in net finance cost in the nine months, driven by the N40bn rights issue it initiated in 2017.

Net profit in the nine months fell by 16.45% to N4.25bn from N5bn in the previous year.

Commenting on the results for the quarter, Baker Magunda, Managing Director/CEO, Guinness Nigeria Plc said, “In the quarter ended 31st March, 2019, Guinness Nigeria delivered results which reflect the continued difficult operating environment. While lager remains a challenged sector, Guinness and spirits recorded considerable growth, and our non-alcoholic malt drinks grew in the face of intense competitive pressure. These developments re-affirm our Total Beverage Alcohol portfolio strategy as a key driver of sustainable growth in the market and we will continue to focus on our strategy.

“Whilst we are conscious of the continued tough operating environment with double digit inflation and pressured consumer spending, we remain optimistic about the execution of our strategy for the remainder of the 2019 financial year,” Magunda said.

Also speaking on the results, Mr. Babatunde Savage, Chairman of the Board of Guinness Nigeria Plc, said, “The Board is confident that our strategy is sound, and we are making the right investments in the company to ensure long term competitiveness”. He further stated that “the Board continues to support the Management in its efforts to build a business that aims to consistently deliver growth for stakeholders.”