Guinness Nigeria Plc looks certain to stand out as one of the few corporate houses where the biggest shareholder value is being built in 2022. The company’s 2021/22 financial year has just ended in June and shareholders can look forward with excitement to a big harvest in a most outstanding year.
By the end of the third quarter of operations in March, the brewing company had multiplied after-tax profit more than eight times year-on-year to over N15 billion. Profit for the third quarter tripled quarter-on-quarter to N6.5 billion.
Guinness has run through the earnings track in the financial year at a galloping speed, gaining momentum from quarter to quarter. The interims show a continuing build-up of quarterly profits from N4 billion in the first quarter to N4.8 billion in the second and further to N6.5 billion in the third, adding up to N15.3 billion for nine months of trading.
The nine-month profit figure is more than eight times the company’s after-tax profit of N1.8 billion in the same period in 2021 and roughly 13 times its full-year closing profit of N1.2 billion in the 2021 financial year.
The company began a recovery journey in the prior financial year from a N12 billion loss it posted in 2020. The 2022 financial year saw a further gain in traction that set the company comfortably on the way to registering the highest profit record in many years.
Guinness’ high-speed growth in profit is propelled by a major reinforcement in sales. There is a change in trend from two preceding years of declining turnover to outstanding growth in sales for the second year in the 2022 financial year.
Strong growth in sales marked the company’s trading throughout the quarters with impressive sales revenues of N47.5 billion in the first quarter, N61.7 billion in the second quarter and over N50 billion in the third.
The numbers add up to a nine-month turnover of N159.4 billion for Guinness Nigeria at the end of March 2022. This represents a year-on-year growth of roughly 39 percent at the end of the third quarter.
The nine-month closing sales figure is almost at par with the N160 billion sales revenue the company recorded for the 2021 full year. This is a marked growth in sales for the company for the second year after a 54 per cent leap in turnover in the preceding financial year.
The strong growth of 39 percent in sales was reinforced by moderated input cost, which grew by less than 24 percent year-on-year to N102 billion at the end of the third quarter.
The cost moderation lowered the proportion of sales revenue devoted to meeting input costs, which went down from about 72 per cent in the same period last year to 64 per cent at the end of the third quarter. This stretched out profit margin and jerked up gross profit by over 76 per cent to N57 billion at the end of the third quarter.
Marketing and distribution expenses could not be contained however and grew well ahead of sales over the review period. At N28 billion, marketing and distribution expenses grew by 52 per cent year-on-year, beating the 39 per cent growth in turnover.
Three favourable developments countered the impact of rising marketing expenses, which include a 41 per cent growth in other income to N1.3 at the end of the third quarter. There was also a substantial cost saving from administrative expenses, which moderated at an increase of less than 4 per cent to N7.6 billion at the end of the period.
The cost-saving from administrative expenses helped to boost operating profit, which jumped three times from N7.6 billion in the same period last year to N23 billion at the end of the third quarter.
The third supportive development for the company is a big drop of almost 87 per cent in net finance cost to N417 million at the end of the third quarter. This resulted from a good combination of high growth in finance income and a sharp drop in finance expenses.
Guinness Nigeria earned N6.98 per share at the end of the third quarter, advancing all the way from 84 kobo in the same period last year. The company’s full-year outlook indicates earnings per share in the region of N9 – the highest earnings record for the company in many years.
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