Guinness Nigeria posts N841.64m Q1 loss on surging input costs

Guinness Nigeria has reported a loss after tax increase of 127.2 percent at N841.64 million for the first quarter ended September 30 as mounting input costs squeezed earnings.

For the period under review, revenue grew by 11.6 percent at N30.02 billion from N26.89 billion printed in first quarter in 2019 — this is the highest level of growth since the third quarter in 2018.

The increase was supported by multiple mid-single-digit price increases implemented on some of its products to cover for the Value Added Tax and excise duty increase since December 2019.

The first quarter also saw volume recoveries following the easing of the COVID-19 restrictions and the gradual reopening of on-trade channels which account for huge percentage of total sales.

Cost of sales grew 21.4 percent at N23.01 billion from N18.95 billion — faster than revenue — while gross profit tanked at 11.71 percent in the first quarter.

The surge in the cost of sales is due to the impact of surging inflation, and FX weakness and illiquidity on input costs.

Marketing and distribution expenses reduced 11.15 percent from N5.20 billion in Q1 2019 to N4.62 billion in Q1 2010.

Administrative expenses also dropped slightly at N2 billion from N2.18 billion — a sign of operational efficiency on the part of management.

Net finance cost fell by 14.1 percent year-on-year as a 96.9 percent increase in finance income offset the 6.2 percent increase in finance costs; it also recorded N384.44 million in FX gains.

Guinness’ loss before tax declined by 14.3 percent year-on-year. However, following a N524.17 million tax deduction during the period, loss after tax increased by 127.2 percent to N841.65 million.

The Diageo-owned company has lost an estimated 46.92 percent in value this year, but it has slowly rebounded with share price hitting N17.65 this week — the highest since June 9, when it traded at N18.00.