Guinness Nigeria Plc suffered a drop of 32 percent in after-tax profit to N2.75 billion in its first quarter operations at the end of September 2022, as net finance expenses jumped more than three times to N1.9 billion at the end of the quarter.
The company’s first quarter interim financial report made up to September 2022 shows a resurgence of finance expenses after a big slash in the preceding financial year. Finance expenses more than doubled at 131 percent to about N2.5 billion in the first quarter – a major upswing from a drop of 54 percent to N2.1 billion in the 2022 full-year operations.
At the same time, an outstanding growth of more than three and half times in finance income to N1.9 billion in the preceding financial year paled to an increase of 18 percent to N597 million in the first quarter.
Compared to a huge drop of 94.5 percent in net finance cost to N226 million at the end of the previous year, the first quarter saw net finance expenses jump by 233 percent to almost N1.9 billion from less than N560 million in the same quarter last year.
Pressure from the cost of finance is a consequence of a rapid expansion of interest-bearing debts by close to 96 percent to over N31 billion towards the end of the company’s 2022 financial year last June.
Apart from finance costs, Guinness also faced strong cost increases from two other angles that consumed sales revenue and slashed profit during the quarter.
The first is administrative expenses which grew by 49 percent to N3.6 billion over the corresponding figure last year. This is in continuation of an unexpected last quarter upsurge in administrative cost in the prior financial year that dried up profit in the quarter.
The second is marketing and distribution expenses, which rose by 43 percent from N6.6 billion to N9.4 billion over the review period.
The cost increases compared to an increase of 11 percent in sales revenue to N52.8 billion and less than 20 percent increase in gross profit to N18 billion over the review period. An increase of N3 billion in gross profit was therefore insufficient to meet the increases in administrative and marketing/distribution costs.
Operating profit went down by 9 percent from N6.5 billion in the same period last year to N5.9 billion at the end of the first quarter.
The cost of sales is maintaining a moderated behaviour for the second year and presents a cost-saving area for the brewing company. At N34.6 billion, the cost of sales grew at a slower pace of 7.5 percent than the 11 percent increase in sales revenue. That enabled an increase of 19.7 percent in gross profit to over N18 billion.
Earnings per share amounted to N1.25 at the end of the first quarter, down from N1.85 per share in the same period last year.
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