TheCable

Guinness Nigeria Plc traded off profit season in the final quarter but galloping growth across three quarters still lifted full year profit twelve and half times to N15.6 billion at full year. A disappointing final quarter added only N350 million to the closing profit of N15.3 billion at the end of the third quarter.

The company’s audited financial report for the full year ended June 2022 shows a complete loss of operating speed with which the brewing company built profits of N4 billion in the first quarter, N4.8 billion in the second and N6.5 billion in the third. 

The company maintained the pattern of the preceding financial year when it closed with a lower profit figure of N1.25 billion than the N1.84 billion it reported at the end of the third quarter. 

The profit dry up in the final quarter is despite that the company raked in sales revenue in excess of N47 billion in the final quarter though it is the lowest quarterly sales figure for the company in the year.

One major cost increase in the final quarter encroached on sales revenue for the period and thinned down profit capacity. This is an administrative cost, which jumped from N7.6 billion at the end of the third quarter to N13.7 billion at full year. This means over N6 billion or 44.5 percent of the administrative expenses for the year were incurred in the final quarter. 

The full year position shows a turnover of N206.7 billion for Guinness Nigeria, which is an increase of almost 29 percent over the closing revenue figure of N160.4 billion in the 2021 financial year.

The company has sustained growth in sales for the second year, changing direction from two preceding years of declining turnover that ended in 2020. It had raised turnover by 54 percent in the preceding financial year.

Cost of sales moderated relative to sales at an increase of about 17 percent to N134 billion at the end of the financial year. Its claim on revenue went down from 71.5 percent last year to less than 65 percent in 2022.

The resulting cost saving from input costs lifted gross profit by 59 percent to N72.7 billion at the end of the year.

The cost saved from the cost of sales was however claimed by marketing and distribution cost that grew well ahead of sales. At over N37 billion, marketing and distribution expenses grew by more than 43 percent compared to the 29 percent growth in turnover. 

Some support came from an outstanding growth of 166 percent in other income to stand at N2.7 billion at the end of the year.

Administrative expenses scurried up from a moderated increase of less than 4 percent at the end of the third quarter to a 33 percent advance at the full year. The increase shifted the position of the expense line from cost saving to revenue consuming over the period. 

That slowed down the exceptional growth of 202.6 percent in operating profit at the end of the third quarter to nevertheless outstanding growth of 142 percent to close at N23.9 billion for the full year. The final quarter recorded only a marginal improvement in operating profit from nearly N23 billion at the end of the third quarter.

The company’s management maintained its good combination of high growth in finance income and a sharp drop in finance costs for the full year. Finance income rose more than three and half times to N1.9 billion while finance costs dropped by 54 percent to N2.1 billion. 

Net finance cost, therefore, fell by 94.5 percent to N226 million at the end of the year. The drop in finance cost however runs counter to a rapid expansion of borrowings by close to 96 percent to over N31 billion in the year. 

Guinness’ profit for the year is the company’s highest in many years. With that, it has rebuilt its retained earnings from 40 percent drop in 2020 to a 61 percent growth to over N41 billion at the end of the 2022 financial year.

The company earned N7.15 per share and is paying it all out to shareholders in cash dividends.