Guinness Nigeria Plc, a subsidiary of Diageo Plc, has announced its audited results for the period ended 30 June 2020 revealing a decline in profit after tax at N12.57bn resulting from the significant impact of COVID-19 lockdowns and ongoing economic challenges.
The audited results which were released to the Nigerian Stock Exchange (NSE) at the financial year-end indicated that revenue decreased 21% to N104.376bn versus the prior period of 2019.
Key Highlights
- Revenue decreased by 21%
- Operating profit declined 243%
- Cost of sales declined 22%
- Net finance charges at N4.24bn
Profit was impacted by a number of one-off accounting adjustments totalling N17.2b, as well as volume declines due to the prevailing economic and COVID-19 impacted conditions. This led to a net loss after tax of N12.6b. Excluding the accounting adjustments, the underlying performance remains strong despite the impacted top-line performance.
Speaking on the announcement, Mr. Baker Magunda, Managing Director/CEO, Guinness Nigeria Plc said:
“The last quarter performance of fiscal 2020 was significantly impacted by restrictions due to COVID-19, exacerbating the already challenging economic environment. Closures of on-trade premises (bars, lounges, clubs and dine-in restaurants) which represent the major part of the consumption occasion for our products; and bans on celebratory occasions impacted sales.”
“Demand was also impacted by reduced consumer income, unemployment concerns due to the shutdown of a large number of businesses, and increases of VAT and excise throughout the year,” Magunda explained.
“Distribution was further impacted by the ban of inter-state, and in some cases intra-state travel. Although Management worked diligently with regulatory authorities to minimise the impact, this hampered our distributors’ ability to restock and have our brands available for purchase”.
The company, however, revealed that its reaction to the challenges presented by the COVID-19 lockdown in Q4 was centred around reducing risk to the business by focusing on cash delivery, reducing distributor inventories, and fast-tracking the ongoing distribution transformation project for efficient sales operations. This focus ensured a reduction of trade receivables by 88% over the same period last year.
“We also focused on cost management by reacting to the drop in demand by reducing operations for a month. Agile actions taken in the period impacted by COVID-19 complemented the work already undertaken throughout the year to reduce Cost of Sales by year-end.”, Managing Director/CEO, Guinness Nigeria Plc, Baker Magunda said.
“Going into the new fiscal year, we are conscious of the continued challenging operating environment with double-digit inflation and pressured consumer income spending. However, we believe the focus we have put in optimising our route to consumer, reducing credit risk and managing cost control will position us to emerge even stronger from the current crisis. We remain confident about the execution and resilience of our Total Beverage Alcohol strategy as a key driver of sustainable growth in the market”, he added.
The Chairman of the Board of Guinness Nigeria Plc, Babatunde Savage assured that “the Board will continue to support the Management in its efforts to sustain global best practices aimed at consistently delivering business growth for stakeholders. We remain confident that the strategy is comprehensive and robust, and that we are making the right investments in the company to ensure our long-term competitiveness”.
Guinness Nigeria, a subsidiary of Diageo Plc of the United Kingdom, was incorporated in 1962 with the building of a brewery in Ikeja, the heart of Lagos. The brewery was the first Guinness operation outside Ireland and Great Britain. Other breweries have been opened over time: Benin City brewery in 1973 and Ogba brewery in 1963.
Guinness Nigeria further packages and markets beverages such as Guinness Stout, Malta Guinness, Harp lager, Guinness Gold etc.
The COVID-19 pandemic found the countries of Sub-Saharan Africa generally ill-prepared to contain the virus or to deal with its economic fallout. First, the capacity of the health-care system to contain the spread of infection, handle emergencies and provide care for the sick was very weak, due, partly, to many years of underinvestment in the health-care system.
Second, there was a lack of fiscal space to adequately fund either containment interventions in the health sector or safety nets to ameliorate the effects of these interventions, particularly for low-income members of the population.
Third, for a majority of the poor, a combination of low personal precautionary savings and an inability to access the credit system in the absence of a formal welfare system meant that they had no means to finance their survival during lockdowns. A sharp decline of remittances exacerbated this difficulty.
These features shaped not only the type and effectiveness of responses to the pandemic but also their impacts on lives and livelihoods in the region.
