NIGERIA – Guinness Nigeria Plc, a subsidiary of Diageo Plc, has recorded a 243% decline in operating profits for financial ending June 2020.
The company reported a profit after tax of just US$32.53 and attributed the dismal performance to the the significant impact of COVID-19 lockdowns and ongoing economic challenges.
The audited results which were released to the Nigerian Stock Exchange (NSE) further indicated that the brewer’s revenues decreased 21% to US$270.14 million.
According to Guinness Breweries, profit was impacted by a number of one-off accounting adjustments totaling US$44.52 million, as well as volume declines due to the prevailing economic and COVID-19 impacted conditions.
This according to Guinness led to a net loss after tax of US$32.61 million.
Excluding the accounting adjustments, Guinness Nigeria noted that the underlying performance remains strong despite the impacted top line performance.
“The last quarter performance of fiscal 2020 was significantly impacted by restrictions due to COVID-19, exacerbating the already challenging economic environment,” Mr. Baker Magunda, Managing Director/CEO, Guinness Nigeria Plc said.
Magunda further noted that 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 also adversely 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.
Guinness in its statement noted that distribution was further impacted by the ban of inter-state, and in some cases intra-state travel.
The brewer noted that although its management worked diligently with regulatory authorities to minimise the impact, disruption of movement hampered the ability of distributors to restock and have Guinness brands available for purchase.
The company however revealed that its reaction to the challenges presented by the COVID-19 lockdown in Q4 was centered around reducing risk to the business.
Guinness explained that it will be focusing on cash delivery, reducing distributor inventories, and fast-tracking the ongoing distribution transformation project for efficient sales operations.
This focus according to Guinness Nigeria ensured a reduction of trade receivables by 88% over same period last year.
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