Guinness Nigeria building biggest loss in years, closes Q3 with N61.7bn loss

Guinness Nigeria Plc is building the biggest loss in many years of trading in the current financial year ending June with net loss already towering at N61.7 billion at the end of the third quarter (Q3).

The net loss swelled from N7.8 billion incurred in the second quarter (Q2), sweeping off its Q1 profit of N2.6 billion, to N56.4 billion for the third quarter.

The company’s interim financial report for its Q3 ended March 2024, shows a deep plunge from a net profit of N1.8 billion in the same quarter last year and from its closing net loss of N5.2 billion at half year.

The brewing company is in the red for the second year, having closed the 2023 operations in June with a net loss of N18.2 billion.

It is also the third year of counting losses in five years from 2020 — when it recorded a loss of N12.7 billion, but this time it is brewing a mega loss that has already submerged shareholders’ funds.

The loss in 2023 slashed the company’s equity capital from roughly N90 billion to N56.4 billion, which has now vanished with the Q3 loss, leaving a negative figure of N4.7 billion.

The company was thrown off balance by foreign exchange (FX) losses that kept multiplying from N3.6 billion in Q1 to almost N18 billion in Q2 and further to N61.4 billion in Q3.

The closing net FX loss of N83 billion for the three quarters is more than 13 times the corresponding figure of N6.3 billion the company recorded in the same period in the prior financial year.

The loss-driving FX losses obscured the strength of growing sales revenue, which has been going for Guinness so far this financial year.

Turnover grew by 43.8 percent to N77. 7 billion for Q3, much stronger than the 26.6 percent increase in Q2 — though the sales figure comes lower than the N83 billion mark attained in Q2.

The company continues to encounter headache from production cost, which keeps growing well ahead of sales at 55.8 percent to almost N56 billion. This is a major increase in input cost from 33 percent to N55.3 billion in Q2.

The gross profit for the quarter improved by 20 percent to N21.7 billion, while operating profit grew by 19.3 percent to N5.8 billion — a continuing slowdown from 33.4 percent growth to N7.9 billion in Q1 and 28.8 percent increase to N8.5 billion in Q2.

The company was blown off course by the FX loss that blew up finance expenses from only N2.6 billion in the same quarter in 2023 to N66.3 billion for Q3.

The net finance expenses flew all the way from N2.2 billion to N61.8 billion over the period, which gulped the N5.8 billion operating profit for Q3 and created a loss of N56.4 billion for the quarter.

The FX losses were also central in the loss the company posted in 2023, accounting for over N48 billion of the N53.3 billion finance cost for the year.

Guinness Nigeria’s nine-month earnings figures show sales revenue of N220.3 billion, which is an increase of 27.7 percent year-on-year, up from 20.4 percent at half year.

The cost of sales, however, grew ahead of turnover at 36.2 percent to N152.6 billion over the same period, picking up from 27 percent at half year.

The gross profit improved by 12 percent to N67.7 billion at the end of Q3, an improvement from 8.6 percent increase at half year.

A combination of an outstanding growth of 107 percent in other income to N3 billion and a slowdown in operating expenses jerked up operating profit by 27.5 percent to N22.2 billion at the end of Q3.

A further boost came from finance income that jumped more than four times to N7.5 billion.

Both the operating profit and finance income, however, disappeared into a net finance expense of N82.7 billion, leaving a pre-tax loss of N60.5 billion and a net loss of N61.7 billion for Guinness Nigeria at the end of Q3.

The company’s losses have erased retained earnings of N7.9 billion at the end of 2023 and raised retained deficit of N53.3 billion at the end of the third quarter.