Due to the negative effects of currency devaluation on bottom lines, Guinness Nigeria Plc announced a pre-tax loss of N73.6 billion for the fiscal year that concluded on June 30, 2024.
When the company revealed its full year earnings, it was evident that losses persisted into the fourth quarter of the year, mostly because of the effect that foreign exchange depreciation had on its foreign currency loans. Guinness reports its year end every June 30th .
The massive brewery recently acquired a new owner when parent company Diageo Plc sold Tolaram Plc the majority of its shares. Compared to the N22.1 billion pre-tax loss reported in the prior financial year, the company’s pre-tax loss for FY 2024 indicates a 233% decrease.
However, the company’s revenue during the financial year appreciated by 30.5% to N299.5 billion, from N229.4 billion as of FY 2023.
According to the financial statement, Guinness incurred a total FX revaluation loss of N112.3 billion during the financial year, up by 129% from the N49.1 billion loss incurred in FY 2023.
According to commentary, the company’s raw material costs grew to N149 billion during the reviewed financial year, a 40% rise over the N106.6 billion raw material costs reported in 2023. Approximately N12.1 billion was Guinness’s trade receivables net projected credit loss for the fiscal year, a 21% increase over the N10 billion reported in the prior fiscal year.
Relationship with Diageo International
- The company’s outstanding loan to Diageo Plc is $22.5 million, as per the financial statement. The loan has a face value of N17.9 billion as of June 30, 2023, the conclusion of the financial year.
- Nonetheless, the loan had a face value of N39.3 billion at the conclusion of the 2024 fiscal year.
- After looking over its loans and borrowings, the corporation had letters of credit obligations to five banks totalling around N814 million at the conclusion of the 2024 fiscal year.
- Comparing this to N45.8 billion at the end of the previous fiscal year, there has been a noticeable decrease.
- The decrease in letters of credit is indicative of a recent tactic used by foreign-based corporations’ Nigerian operations to lessen the negative effects of scarce foreign exchange on their balance sheets.
- These businesses used their increasing intercompany liabilities to purchase foreign exchange or raw supplies.
- Due to the fact that intercompany loans have better terms than standard bank credits.
Remember that the corporation just sold Tolaram the majority ownership in Guinness Nigeria, signalling a change in the company’s relationship with Diageo International.
