Guinness Nigeria Plc said its revenue and profit continued to face market headwinds in the first half of the year.
Diageo-owned reported a tepid rise in sales for the six months to the end of December. Sales rose by 1percent to N68.3bn from N67.8bn in the same period in 2019, driven by double-digit expansion in brand Guinness and its spirits portfolio. Operating profit fell by 23percent to N3.6bn due in part to the marginal sales increase.
Net Finance cost surged 92percent in the first half to N1.6bn as a result of a 144percent increase in the first quarter. Net finance cost in Q2 was 39percent. Net profit fell by 49percent to N1.3bn from N2.6bn in the previous year.
The company blamed the marginal sales rise on the effect of the excise duty increase on sales and the absence of pricing opportunities in the half.
Speaking at the company’s investors conference call, Baker Magunda, managing director/chief executive officer Guinness Nigeria said the Guinness brand and the spirits portfolio grew at strong double-digit levels in H1, with solid performance in local malts reinforcing the increased revenue.
He said the company saw continued growth in its Smirnoff Ice, but had a bit of difficulty on Orijin RTD.
Malta Guinness, which is another big area in our business, had a very difficult quarter 1 but had significantly improved in quarter 2 as well.
“The Lager segment remains difficult, it’s an area that we are careful in how we invest and push because of the thin margins in that category. However, as we mention in our strategy, we will be innovating into premium lager. We’ve gone the craft innovation we’ve gone into, so our Gold, Guinness Gold, are still in one city, Lagos and doing very well,” he said.
Consumer response is very good, the trade is endorsing the brand so we feel that we have got the right strategy on that as well, to slowly exit the value end of the market and innovate at the top end of the market, and in certainly Guinness Gold which has given us a real reason to believe.
We continue expanding our mainstream spirits portfolio range. Orijin Gin has gone in and that is going well. Baileys Delight, the version of Baileys we produce in Nigeria, that has also gone really well. It’s settling in very well. So, we are pleased to see that the innovations we are putting in are beginning to respond in the way that we wanted to do. So, that’s on the innovations.