Guinness Posts Over N5bn Loss

Guinness Nigeria Plc lost N5.233 billion in operating profit for the year that ended in December 2023 as a result of foreign exchange expenditures.

The company’s unaudited interim financial results, which were submitted to the Nigerian Exchange Limited on Thursday, included this information.

At the group’s 73rd Annual General Meeting, which was held in Lagos, shareholders of the brewer objected to the non-declaration of an interim dividend for the period ending in June 2023.

In response to shareholder concerns, former managing director John Musunga blamed the development on the Federal Government’s FX harmonization strategy.

Additionally, he contended that the corporation needed to have strong retained earnings or post-profit in order to follow best practices when distributing dividends.

“In this case, we had to service that FX fluctuation, which resulted in a significant reduction in our retained earnings. We also recorded N18 billion in losses, which negatively impacted our profit and loss position. According to best practices, dividends should not be paid out if there are no retained earnings or if a loss is declared, according to Musungu.

Guinness Nigeria’s income increased by 20.38 percent to N142.595 billion by the end of 2023.

However, due to marketing and distribution costs of N23.790 billion, administrative costs of N8.264 billion, and a 255.79 percent increase in financing expense to N23.884 billion from N6.713 billion during this period, the cost of sales increased to N96.656 billion from N76.161 billion.

Due to this, the company lost N5.233 billion in 2022 as opposed to making N4.024 billion in profit.

A dissection of the brewer’s financing costs revealed that currency remained a significant problem for the company.

Exchange discrepancies on foreign currency loans and interest incurred were the next biggest causes of the increase, after the loss on remeasurement of foreign currency holdings.

In October of last year, Guinness declared that, as of April 2024, it will no longer be importing or distributing specific Diageo international premium spirits.

It claimed that by stopping to import spirits from the international alcoholic beverage corporation, it would need less foreign exchange.

Additionally, Diageo will open an office in Nigeria this year as a result of the suspension of its spirit imports.

Diageo’s new venture in Nigeria will only deal with spirits. The brand’s well-known items include Baileys, Singleton, and Johnnie Walker, among others.

Guinness Nigeria, a Diageo subsidiary, lost N49 billion due to exchange rate fluctuations during its 2023 half-year operations. In August, the company disclosed that it was having difficulties obtaining foreign exchange for its operations, even though the Central Bank of Nigeria had unified the market’s segments in June.

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