Guinness Nigeria’s closing after-tax profit of N15.6 billion is the company’s biggest profit in many years and exceptional growth of twelve and half times the closing profit of N1.25 billion in the preceding year. Yet, it is significantly lower than expected.
The brewing company’s galloping speed growth was completely broken in the final quarter when its quarterly average profit of over N5 billion at the end of the third quarter plunged to a piddling N350 million. The full-year profit figure is therefore only slightly up from the closing figure of N15.3 billion in the third quarter.
The company’s audited financial report at the end of June 2022 shows that though it raked in as much as over N47 billion in sales revenue in the final quarter, the ability to convert the same into profit was eroded by an unexpected surge in cost.
The major cost increase that consumed earnings in the quarter is administrative cost, which accelerated from less than a 4 per cent increase at the end of the third quarter to a 33 per cent rise in the full year to close at N13.7 billion. This represents an increase of over N6 billion in the three months of the fourth quarter from the N7.6 billion closing figure for the third quarter.
Despite the loss of profit growth momentum in the final quarter, Guinness Nigeria has established one of the most improved earnings performance records that may be expected across sectors and industries in the 2022 financial year.
The performance takes the company to full recovery from a N12 billion loss it suffered in 2020. This has powered a 61 per cent growth in retained earnings to over N41 billion at the end of the year after a 40 per cent drop in 2020.
The brewing company closed the full year with a topline of N206.7 billion, representing an increase of about 29 per cent over the closing turnover figure of over N160 billion at the end of the 2021 financial year.
Sales revenue has witnessed an upturn since 2021 when it grew by 54 per cent, representing the critical factor in the company’s turnaround. The company had lost sales in the preceding two years to 2020.
Moderated costs added to the upswing in sales revenue to propel the high-speed profit growth in 2022. These include the cost of sales, which moderated at an increase of about 17 per cent to N134 billion at the end of the financial year.
Cost of sales claimed a reduced share of sales revenue at less than 65 per cent in 2022, down from 71.5 per cent in the preceding year. That enabled an increase of 59 per cent in gross profit to N72.7 billion at the end of the year.
However, marketing and distribution costs grew well ahead of sales by 43 per cent to close at over N37 billion for the year. That added further to the pressure from the high jump in administrative expenses to slow down operating profit from 203 per cent growth at the end of the third quarter to a nevertheless impressive increase of 142 per cent to close at about N24 billion in the full year.
The slowdown in operating profit reflects a modest addition of about N1 billion in the final quarter.
The company grew finance income by more than three and half times to N1.9 billion and cut finance costs by 54 per cent to N2.1 billion. Net finance cost, therefore, dropped by 94.5 per cent to N226 million at the end of the year.
The company’s balance sheet shows a rapid expansion of interest-bearing debts by close to 96 per cent to over N31 billion in the year.
Guinness Nigeria earned N7.15 per share at the end of the year and has announced a 100 per cent pay-out to shareholders in cash dividends.
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