Again, Guinness Nigeria’s Loss Growing, Nets N8bn In Q2

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Guinness Nigeria Plc ended its second quarter operations with a net loss of N7.8 billion for the quarter, overwriting its first-quarter profit of N2.6 billion to produce a net loss of over N5 billion for half year.

The brewing company is staying on the path of losses for the second year after closing the 2023 trading in June with a net loss of over N18 billion and counting losses for the third time since 2020.

The huge loss in 2023 wiped off about N34 billion of the company’s shareholders’ funds to close at N56.4 billion, which dropped further to N51.7 billion at the end of the half-year operations.

The half-year interim financial report of the brewing company at the end of December 2023 shows it was thrown off balance by a foreign currency loss in excess of N14 billion that occurred in the second quarter.

The foreign exchange loss was more than eight times the corresponding figure of less than N1.7 billion the company incurred in the same quarter in the preceding financial year and soaring from less than N2.9 billion foreign exchange loss in the first quarter.

The loss-leading foreign exchange losses obscured the strong gains in sales the company registered in the second quarter.

Sales were up by 26.6 percent to N83 billion for the second quarter, more than twice the growth of 12.6 per cent to N59.5 billion in the first quarter.

However, production cost continued to grow well ahead of sales at 33 percent to over N55 billion in the second quarter, up from a 19.6 percent increase to N41.4 billion in the first quarter.

In spite of exceptional growth in other income and a slight decline in administrative expenses in the second quarter, operating profit slowed down from a 33.4 percent rise to N7.9 billion in the first quarter to 28.8 percent to stand at N8.5 billion in the second quarter.

The big blow for the company came from the foreign exchange loss-induced four and half times jumps in finance expenses to N19 billion for the second quarter. Net finance expenses multiplied close to five times to the region of N17 billion at the end of the quarter, twice the N8.5 billion operating profit for the quarter.

Massive growth in finance costs, driven by foreign exchange losses, is happening to the company for the second year. A finance cost of over N53 billion at the end of the 2023 financial year constitutes mostly foreign exchange losses of over N48 billion for the year.

Guinness Nigeria’s half-year earnings figures are a dilution of increased selling momentum and loss leading to foreign exchange losses in the second quarter and the profit-delivering performance of the first quarter.

Sales revenue for the half year amounted to N142.6 billion, which is an increase of 20.4 percent year-on-year. Production cost however grew ahead of sales at about 27 per cent to N96.7 billion over the same period.

The increased incursion of production cost permitted an increase of 8.6 percent in gross profit to less than N46 billion at the half year, better however than a slight decline in gross profit in the first quarter.

Three favourable developments powered an impressive growth of 30.7 percent in operating profit to N16.4 billion at the half year. These are an outstanding growth of 163 percent in other income to N2.5 billion, a moderated increase of 8.5 percent in marketing and distribution expenses to N23.8 billion, and a decline of 6 percent in administrative cost to over N8 billion.

Both the operating profit and outstanding growth of 118 per cent in finance income to N3 billion were consumed by finance expense of close to N24 billion, leaving a pre-tax loss of N4.4 billion and a net loss of N5.2 billion for Guinness Nigeria at half-year.

The company’s losses continue to erode equity resources with retained earnings further down by 60 per cent to slightly over N3 billion at half year after plunging by 81 percent to close at N7.9 billion in 2023.

Guinness Nigeria has suffered two major losses since 2020 – the loss of N12.7 billion in 2020 and the N18.2 billion loss in 2023 while a loss for the third time in five years is in process so far in 2024.

The company lost N2.39 percent for shareholders in the half year, down from earnings per share of N1.84 in the same period in the preceding financial year.

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