Guinness Nigeria Plc said that a challenging macroeconomic environment, coupled with the competition, unfavourable mix performance and excise duty increases on both beer and mainstream spirits negatively impacted its first-quarter results ending in September.
Revenue for the drinks company fell by 4% to N26.9bn from N28bn in the same period in 2018. Operating profit declined by 59% to N682m, from N1.67bn, driven by the drop in revenue.
Commenting on the results, the company noted that “These topline performance factors, and especially the excise duty increases, impacted our Gross Profit.
“However, the operating profit reduction was mitigated by several cost line initiatives.
Cost of Sales was flat, benefiting from “improved efficiency plus a number of productivity initiatives, while distribution cost reduced by 16% through our efficient utilisation of fixed cost logistics assets.
“Administration expenses were flat due to productivity gains offsetting inflationary cost pressures. Meanwhile, our marketing spends increased by 8% as we continue our focus to invest in building the equity in our brands, and also on other opportunities identified by our use of tools and talent.
The company saw net finance cost skyrocket by 144% to N1bn from N432m pushing the firm to declare N370m loss. In the same period in 2018, the company recorded N836m in profit.
Guinness said that its Board remains confident that its strategy is right and that it is making the right investments in the company and brands to ensure its long-term competitiveness and will continue to support the management in its efforts to build a business that aims to consistently deliver growth for stakeholders.