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Guinness Nigeria posts N73.7bn loss ahead of takeover
Guinness Nigeria has reported a loss before tax of N73.68 billion (£35.5m) in FY24 as the Naira continues to slip.
Diageo’s Nigerian subsidiary, which produces and distributes Guinness in Nigeria, has posted its results for the financial year ended 30 June 2024.
Its full year earnings showed that losses continued into its fourth quarter of the year largely due to the impact of forex depreciation on its foreign currency loans.
The weakness of the Naira led to the losses, according to Guinness Nigeria’s results, which are equivalent to £35.5m.
The Naira continues to slip, and the spot rate moved from N759.03/US$1 at the start of the year to N1,540/US$1 at the end of the financial year.
This resulted in a substantial unrealised forex loss and a loss before tax of N73.68bn, the company said.
Nigeria’s Naira is the second-worst performing currency globally in 2024, according to Bloomberg. The currency has weakened to a four-month low in July, despite the central bank’s action to shore it up. Inflation risk for the central bank continues to rise as a result.
Guinness Nigeria said it was also battling against all-time high inflation, fuel subsidy removal and food insecurity, all of which created macroeconomic challenges the company was forced to endure.
The company also faced increased cost of sales, which rose by 37% due to inflation-driven hikes in raw material prices, unprecedented utility cost increases, and the Naira’s devaluation.
Not all bad
However, operating profit rose by 9%.
Guinness Nigeria also reported 31% year-on-year revenue growth in the year to 30 June 2024.
This strong performance was even more pronounced in the second half of the year, with revenue growth accelerating to 41%, up from 20% in the first half, the company said.
Targeted price increases have been implemented to offset rising costs.
Omobola Johnson, chairman of the board of directors, Guinness Nigeria, stated: “We remain committed to continuously evaluating our strategy against the evolving business landscape to ensure we deliver returns to our shareholders and create long-term value for all stakeholders. Our performance this year demonstrates the resilience and adaptability of our business in the face of economic challenges.”
Toleram takeover
Diageo announced it was selling its shareholding in Guinness Nigeria to Singapore-based consumer goods conglomerate Tolaram in June. Diageo will retain ownership of the Guinness brand.
Tolaram will acquire Diageo’s 58.02% shareholding in Guinness Nigeria PLC, a company listed on the Nigerian Stock Exchange, for a share price of 81.60 NGN per share, a 63% premium to the 30-day VWAP.
Diageo said the move was designed to “accelerate the growth of Guinness in Nigeria” in a press release. The company said it is creating a new model for Guinness in the west African country, as well as its locally manufactured ready-to-drink (RTD) and mainstream spirits (MSS) products in the country.
Long-term license and royalty agreements with Tolaram have been agreed as part of the deal. Read more here.
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