Guinness Nigeria Plc announced its financial results for the third quarter that showed strong growth in earnings, which was largely driven by price increase across all brands, improved favourable brand mix and resilient consumer demand.
Analysts at Chapel Hill Denham in a recent report said going by the current revenue run rate, they believe the beer maker is on track to deliver a stellar revenue growth for FY-22E, to be driven by spirit and malt categories.
Of all the beer makers in the country, Guinness’ products have the most market penetrating products that are in every bar, clubs, and being hawked on the streets of cosmopolitan cities across the country.
The company’s gross profit increased by 19.76 percent to N18.23 billion in the nine months to 2022 from N15.23 billion as at September 2021.
Sales was up 11.33 percent to N52.84 billion in September 2022 from N47.46 billion the previous year.
Of course, investors have rewarded the company for stellar performance and unflinching resilience amid the macroeconomic turbulence as the firm has outperformed the NGXASI so far this year.
The share price of Guinness has appreciated by 112.56 % year to date (ytd), which outperforms the NGX ASI 5.02 percent as of 2:00 pm on October 26, 2022 in Lagos.
However, higher finance costs due to rising interest rates as the central bank adopts an aggressive monetary policy to curb inflation led to a reduction in profit, but the company has enough financial strength to pay interest on money borrowed from banks.
Also, rising marketing, distribution and administrative expenses helped squeezed profit.
Net income dipped by 32.17 percent to N2.74 billion in the period under review from N4.04 billion as at September 2021.
Finance cost surged by 129.83 percent to N2.45 billion in September 2022 from N1.06 billion the previous year.
It is worth noting that Guinness is not susceptible to financial risk as it has a strong balance sheet and a solid cash flow to settle financial obligations, pay dividend, and fund future expansion plans.
The company has been intensifying its expansion strategy, constructing new factories with a view to increasing its share of the Nigerian market.
Last year, the second largest brewer by revenue completed the acquisition of 25 acres of commercial property in the Ogba industrial area of Lagos.
About 11 years ago, parent company Diageo Plc invested over N52 billion in capacity expansion, the single largest investment of Diageo in any single market anywhere in the world.
Guinness Nigeria subscribes to the highest standards of corporate governance and continues to demonstrate the highest standards of integrity, and especially guarantee that its engagement with consumers, government agencies, suppliers, shareholders, and other stakeholders is driven by our values and principles.
“We remain committed to the development of communities where we live and operate. Our investment in capacity expansion at a time when the harsh economic reality is forcing many companies to divest or consider divesting from Nigeria shows our unwavering commitment to the long-term viability of this country,” said Rotimi Odusola, Corporate Relations Director and Company Secretary of Guinness Nigeria.
“We will continue to invest in the Nigerian economy and will ensure consistent delivery of great quality products and socio-economic benefits to our revered consumers, esteemed shareholders, host communities and public,” he added.