The results show that the Company delivered a profit after tax of N1.4 billion.
Revenue declined 5% driven by impact of volume, excise duty increases and Covid-19
Cost of Sales declined faster than revenue-boosting gross margin to 32%
Marketing spend increased by 6%
Distribution and administration expenses increased on the back of inflation
Operating Margin remains at half-year level
Profit before tax declined by 67.9% to N2bn.
Profit after tax declined by 68% to N1.4bn, impacted significantly by the depreciation of the Naira
Net Assets also declined by -2.2% to N87.1bn from N89.1bn.
Commenting on the announcement, Mr Baker Magunda, Managing Director/CEO, Guinness Nigeria Plc said: “In the 3 months ended 31 March 2020, Guinness Nigeria’s revenue declined 5% compared to the same period last year on the back of volume decline driven by the price increases that we took in the quarter and the initial impact of COVID-19. Revenue for the year to date continues to be impacted by excise duty increases which prior to February were not covered by the price. We remain confident, however, that the underlying performance of our main strategic focus brands/categories – Guinness, Malta Guinness, RTDs and spirits – remains solid.”.
“I am however pleased by the work we are doing on productivity. Despite Nigeria’s inflation rate at 12%, our cost of sales declined at a faster rate of 7% compared to revenue and therefore improving our year to date gross margin to 32%. Similar productivity initiatives mean that the increases in distribution expenses by 2% and the administration expenses by 7% are still below inflation. We also boosted our marketing spend by 6% to support our brands. The operating profit declined by N2.1bn. The recent depreciation of the Naira drove the increase in finance costs by N2.1b year on year, impacting profit delivery.”
“Our business was impacted in the last half of March by the COVID-19 outbreak. This has also proven to be an economic crisis significantly impacting most businesses including ours, as much as it is a health crisis. As a proud business with 70 years heritage here, we stand with Nigeria by aligning with the efforts of the Federal and State governments to stop spread the virus across the country. We have made donations of hand sanitisers as well as provided non-alcoholic drinks to the Nigeria Center for Disease Control (NCDC), the Federal Ministry of Humanitarian Affairs, Disaster Management and Social Development and several states in Nigeria. These materials are to support frontline health workers and security officers as they work tirelessly to curtail the spread of the virus, as well as to provide relief to vulnerable groups in various communities in Nigeria.”
Mr. Babatunde Savage, Chairman of the Board of Guinness Nigeria Plc, said “The Board is confident that our strategy is sound and that we are making the right investments in the company to ensure our long term competitiveness. We will continue to support the management in its efforts to build a business that aims to consistently deliver growth for stakeholders. The Board, however, notes that the COVID-19 pandemic that has led to Nationwide restrictions will continue to have an impact on the operations of the business in the current financial year. Both the Board and Management are closely monitoring the evolving situation and continues to be agile and take actions to protect the business.”