Guinness Records 66% Decline in Profit in Six Months
Leading brewing firm, Guinness Nigeria Plc has recorded another dismal financial performance for the half year ended December 31, 2015, showing dip of 66 per cent in profit after tax to N1.172 billion.
Details of the results show that Guinness posted a revenue of N49.8 billion for the period, down by 10 per cent from N55.4 billion recorded in the corresponding period of 2014.The company was able to reduce cost of sales by four per cent from N29.5 billion to N28.4 billion, while distribution and administrative cost went down by five per cent to stand at N18.2 billion, from N19.1 billion. Other income fell by 41 per cent from N390 million to N229.8 million. The company was also able to reduce its financial charges by 26 per cent from N2.326 billion to N1.722 billion.
Despite efforts to reduce the cost of operations and borrowing, Guinness ended the half year with a profit before tax N1.65 billion, showing a decline of 65 per cent compared to N4.658 billion in 2014. Although the company paid a tax of N479 million, which is 62 per cent lower than the N1.259 billion paid in the corresponding period of the previous year, it ended the period with profit that was 66 per cent lower than the 2014 performance. Specifically, Guinness recorded a profit after tax of N1.172 billion in 2015, down from N3.398 billion in 2014.
Commenting on the second quarter figures, FBN Capital said: “Although opex and inter- est expense both fell by 10 per cent year-on-year (y/y) and 43 per cent y/y respectively, the combination of weak growth on the topline and the y/y contraction in gross margin completely offset the positives from these lines.” According to FBN Capital, compared with their estimates, the results were weaker on all key headline items. “Although prevailing macro-headwinds and weak consumer discretionary spend has constrained topline growth for most consumer goods companies including the brewers, we believe that Guinness Nigeria has been more impacted than its rivals due to limited representation in the value category. As such, Guinness’ sales growth has slowed down as consumers down-trade to cheaper value brands,” the company said.