Super star subsidiary of Diageo Plc, Guinness Nigeria Plc, has reported a 9% revenue growth for the first half year ended 31 December 2022 benefiting from price and mix optimization, resilient consumer demand, and improved outlet coverage.
The company said its profit after tax stood at N1.275 billion (US$2.7m) while gross profit rose by 16 percent, and a five percent increase in the cost of sales despite the challenging business environment driven by inflation and the impact of naira devaluation on imported materials in the period under review.
According to the Managing Director and Chief Executive Officer of the company, Mr. John Musunga, the continued devaluation of the naira resulted in a 758 percent increase in net financing costs, due to the revaluation of the hard currency debt.
He added that revenue grew across most categories, driven by strategic focus brands, Guinness, Ready-to-Serve, and Spirits.
Malta Guinness was flat on the previous year due to the impact of increased pricing in response to the higher inflationary pressure on packaging costs.
In the period, the company’s finance income increased by 121 percent on account of higher yields from short-term cash investments.
Distribution expenses increased by 28 percent, driven by an increase in the price of diesel, other haulage inputs, and asset replacement costs. Despite all the above, it delivered N12.6bn (US$27m) operating profit.
In addition, marketing expenses increased by seven percent, as the increased marketing investment to support its strategic growth priorities and target market share improvement.
Musunga noted: “In the half year ended 31st December 2022, Guinness Nigeria delivered results that reflected the continued regulatory, competitive, and inflationary challenges in the operating environment in Nigeria.”
“The period was characterized by challenges such as escalating inflation, dwindling consumer disposable income, and a worsening foreign exchange situation. Despite these challenges, the business recorded good progress against our strategic focus brands.”
The Chair of the Board of Guinness Nigeria Plc, Dr. Omobola Johnson, commented that the board is confident that the company’s strategy is sound, and will in the long term continue to drive value to all stakeholders.
