A beverage company in Nigeria, Guinness Nigeria Plc, which is a subsidiary of Diageo Plc, has declared N1.2bn as its profit for the third quarter of 2018.
In its unaudited financial statements for the period ended September 30, 2018, made available to the Nigerian Stock Exchange, the company said its increase in profit before tax was driven by lower finance charges.
It said it was as a result of the rights issue, which more than offset operating profit decline in the company’s challenging operating environment.
According to the report, the net sales, however, declined by six per cent in the three months period ended September 30, 2018.
The company said the decline was primarily driven by increased competition in the value beer segment, that more than offset growth across the rest of the business.
It added that its gross profit declined by 12 per cent as a result of continued inflationary pressure on raw material costs and volume declines.
Marketing spend of the company also declined by eight per cent, while operating profit declined by 37 per cent, largely as a result of the gross profit decline.
The Managing Director/Chief Executive Officer, Guinness Nigeria Plc, Mr Baker Magunda, said in the three months period ended September 30, 2018, the company delivered results that reflected the continued challenges in the operating environment and increased competition in the beer category.
According to him, continued inflationary pressure on raw material costs and volume declines impacted both gross profit and operating profit.
He said the profit before tax, however, benefitted from a significant reduction in net finance charges as a result of the rights issue.
“Looking forward, we will continue to focus on the three strategic pillars of productivity, expansion of our portfolio, as well as the execution of the commercial footprint initiatives to improve performance in the business,” Magunda said.
He added that while the management remained optimistic about the execution of the new strategy, they took into consideration the fact that the operating environment may likely continue to be challenging for the rest of the year and even in the 2019 financial year.
The Chairman, Board of Directors, Guinness Nigeria Plc, Mr Babatunde Savage, said, “The board is confident that we are making the right investments in the company and our brands to ensure our long-term competitiveness. “The board will continue to support the management in its efforts to build a business that can win in the market and deliver growth.”
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