With a market capitalisation in excess of N 242.703billion, Guinness Nigeria plc is the second largest brewer in Nigeria listed on the Nigerian Stock Exchange (NSE).
Guinness recent financials are burdened by bottom-line performance drags like high financial charges, administrative expenses and other cost disadvantages which slows the brewer profit when compared to major competitors.
At the beginning of this week, Guinness Nigeria plc with shares outstanding of about 1,505,888,188 units was priced at N161.17kobo at the Nigerian bourse.
The condensed interim financial statements of Guinness Nigeria plc for the third quarter (Q3) ended March 31, 2015 shows revenue at N84.750billion from N78.018billion in the corresponding nine months ended March 31, 2014.
In the three month ended March 31, 2015 the beer maker reported revenue increase to N29.482billion from N25.261billion in the corresponding three months ended March 31, 2014.
In the nine months period, marketing and distribution expenses rose to N20.250billion as against N19.013billion in the corresponding period of 2014. In the three months period, it rose to N7.104billion from a corresponding N6.469billion in three months ended March 31, 2014.
Administrative expenses rose in three months to N3.424billion as against N2.307billion in corresponding three months period of 2014; while in nine-months to March 31, 2015, it increased to N9.444billion from N7.220billion in corresponding nine months ended March 31, 2014.
Guinness Stout was first exported to Sierra Leone in 1827 and soon became popular across West Africa. In 1963, Ikeja in Lagos Nigeria was chosen as the first location outside the British Isles to brew the iconic dark beer. Two years later, in 1965, Guinness Nigeria was listed on the Nigerian Stock Exchange
The company’s operating history in the Nigerian beer market is over five decades. Over the years, the premium Guinness stout producer has recorded impressive sales and distribution of its Guinness Stout and Harp Lager beer brands in the Nigerian market, thus making Nigeria the largest market for Guinness Stout in the world by net sales value.
Guinness Nigeria products include the acclaimed brands: Guinness Foreign Extra Stout, Guinness Extra Smooth, Malta Guinness, and Harp Lager beer. Other brands include Gordon’s Spark, Smirnoff Ice, Armstrong Dark Ale, Satzenbrau Pilsner, Top Malt, Harp Lime, Dubic Extra Lager and most recently, Malta Guinness Low Sugar.
In the nine-month period, Guinness Nigeria plc reported net finance charges increase to N3.466billion against the corresponding nine-month period of 2014 at N2.855billion. Operating expenses rose to N28.091billion from N25.298billion. One off costs rose to N1.042billion from N360.604million.
In the review three months period to March 31, 2015 Guinness Nigeria plc reported profit before taxation (PBT) increase to N2.475billion from N1.409billion in the corresponding period of 2014; while in the nine months period, the brewer’s PBT declined to N7.134billion from N7.823billion in the corresponding period of 2014.
While its profit for the three month period rose to N1.817billion from N946.381million in corresponding three months of 2014; in the nine months period, the company’s profit after taxation declined to N5.216billion from N5.943billion in corresponding period of 2014. Its basic earnings per share rose in three months to 121kobo from 63kobo in corresponding period of 2014; but in the nine months period to March 31, 2015 it dropped to 346kobo from 395kobo in corresponding 2014 period.
Analysts at Meristem had last year in their report noted that though the introduction of ‘Orijin’ by Guinness Nigeria into the market appears to be a major success, given the wide spread acceptance that greeted the herbal-mixed brand, “we suspect that the brand may be taking the competition back home, a sort of market cannibalism (by displacing some of its sister brands like Smirnoff).”
In a statement to the Nigerian Stock Exchange and shareholders on the unaudited financial results for the nine months ended March 31, 2015, the directors of Guinness Nigeria plc said, “We recorded a strong performance in the quarter driven by the continued success of Orijin and our participation in the value segment of the market through Satzenbrau along with the improving performance of Guinness stout. As a result, we are reporting a double digit net sales growth in the period. The quarter benefitted from strong depletion in the Christmas 2014 season resulting in lower opening distributor inventory at the beginning of the third quarter”.
The directors added: “High finance costs in a high interest rate environment negatively impacted overall profitability. However, we will continue to invest in our brands and enhancing our route to consumer. We expect the ongoing currency devaluation to lead to increasing cost pressure and softening consumer demand. In addition, the one -off tax credits in the prior year will not recur”.
Iheanyi Nwachukwu
