Guinness Nigeria gets back into profit after several quarters of losses

Baker Magunda

Guinness Nigeria PLC, the second largest brewer in the country has finally returned to reporting profits after many quarters of losses that trailed its performance.

Guinness said it recorded a gross profit of N48.3bn which is 16% higher versus the previous year and an operating profit of NGN10.2bn representing an increase of 131% year on year.

Total revenue for the period rose by 21% to NGN125 billion compared to NGN101 billion reported same period last year. Operating profit was further boosted by cost-cutting measures and financing models to NGN10 billion compared to NGN4.4 billion in the previous year.

In an email statement issued by the company, Mr Babatunde Savage, Chairman, Guinness Nigeria Plc, said that the company remains committed to the Nigerian market. “It is pleasing to see that the decisions we have taken in recent years have helped to position the company for sustained business growth. We are grateful for the strong support that our shareholders have afforded us over the years. With our continuing focus on driving performance and our determination to positively impact the lives of Nigerians. We look forward to continuing to give Nigerians a reason to celebrate life every day and everywhere.”

Acquisitions to note

Guinness also disclosed that it has acquired rights to distribute McDowell’s, a United Spirits Limited (USL) whisky brand. for several years, McDowell, a USL brand has been marketed to entry level and low-income whisky market across Southern parts of Nigeria.

The acquisition happened after USL opted out of its structure of direct distribution. The company also acquired the rights to distribute International Premium Spirits (IPS) including Johnnie Walker Scotch whisky and Bailey’s liqueur in Nigeria.

Ndegwa also stated that “Our gross profit of N48.3bn is as a result of volume growth, pricing benefit and a favourable sales mix as we continued to invest in our expanded brand portfolio during the year. Part of that investment includes the N4.7billion spirits line for locally manufactured spirits which we commissioned in Benin. These strategic acquisitions and expansions have filled the gaps in the spirits brand base allowing us to compete across all categories of the alcoholic beverage market in Nigeria. We remain committed to executing our productivity agenda with a strong focus on cost reduction, distribution and operational efficiencies.”

Also speaking to the results, Mr Babatunde Savage, Chairman, Guinness Nigeria Plc, said that the company remains committed to the Nigerian market. “It is pleasing to see that the decisions we have taken in recent years have helped to position the company for sustained business growth. We are grateful for the strong support that our shareholders have afforded us over the years. With our continuing focus on driving performance and our determination to positively impact the lives of Nigerians. We look forward to continuing to give Nigerians a reason to celebrate life every day and everywhere.”

Total profit for the half year 2017 period was NGN1.9 billion compared to NGN2 billion net loss reported within the same period. For a brewer carrying Diageo’s trademark in the most populous city in Africa, it is a small number, this is according to an equity analyst who said the company’s return to profit is, however, a welcomed development for shareholders.