Guinness Nigeria Plc, one of the leading brewery companies in the country, has reported a financial downturn in its latest unaudited report for the nine months ending March 2024.
The company recorded a loss before tax of N60.45 billion, its first loss in five years while in the same period last year, the company reported N9.94 billion in profit.
The loss is attributed to a combination of increased operational expenses and significant foreign exchange (FX) pressures. Operating expenses surged by 9% from N44.43 billion to N48.50 billion.
This rise in costs, coupled with an 89% increase in FX loss to N83 billion, largely driven by a $22.5 million loan from its parent company and the float in exchange rate in 2023, severely impacted the company’s bottom line.
Despite these challenges, Guinness Nigeria’s revenue saw a notable increase of 27%, climbing to N220.30 billion from N172.47 billion the previous year.
This revenue growth was primarily due to increased local sales, indicating a strong market presence despite the financial hurdles.
Analysts at CardinalStone noted that the elevated cost pressures are expected to persist in the coming quarters, driven by rising inflation affecting locally sourced raw materials and foreign exchange volatility impacting imported products.
They anticipate a flattish EBIT margin of 10.1% for the full year 2023/2024, influenced by high energy prices and increased marketing expenses due to intense industry competition.
The challenging economic environment has led to a significant increase in the prices of many commodities.
Nigeria’s headline inflation hit a 28-year high of 33.95% in May, reflecting the declining purchasing power of consumers.
Despite the current financial setback, there is optimism about the future. Analysts expect a recovery in EBIT margin to 10.2% in the 2024/2025 fiscal year, supported by the localization of raw materials, improved export earnings, and reduced foreign currency exposure.
The recent acquisition of a majority stake by Tolaram, coupled with long-term licensing agreements, is anticipated to provide synergistic benefits and strong revenue growth.
