Guinness Nigeria Plc (Guinness) has recently released its unaudited Q3 results to 31 March with the result showing a marginal increase of 2.5 per cent in turnover from N89.8billion ($571.8 million) to N92.8 billion. ($590.9 million)
The audit reveals a decline in Guinness’ profit before tax, for the second consecutive quarter, by 24.0 percent from N17.5 billion naira ($ 111.4 million) to N13.3billion naira ($84.7 million). Profit after tax also dipped by a similar 24 percent to N9.1billion ($57.9 million).
Furthermore, Profit before tax and Net Margins dropped from 19.6 per cent and13.3 per cent in Q3 2010 to 14.5 percent and 9.9 percent respectively.
Afrinvest analysts said the brewer’s top line revenues came in 9.7 per cent below our estimate, while Profit before tax missed targets by 22.0 per cent and 29.3 per cent respectively. According to them, on a Q-on-Q (quarter on quarter) basis the brewer’s turnover declined by 4.4 percent, while Profit before tax and Profit after tax both slumped by 58.3 per cent and 66.1 per cent respectively.
The analysts further opined that: “in our view, the brewer’s sluggish growth in top line revenues indicates a loss of market share to its main rival Nigerian Breweries”. This, according to Afrinvest has necessitated a downward review of our initial Financial Year 2012 forecast for Guinness, given our expectation of a much slower run rate than previously modeled.
However, a key downside risk to the current rating for the brewer is a change in its management’s strategy for the 2013 financial year, in view of the board’s recent appointment of a new MD/CEO designate billed to resume office on July 1st 2012.
Guinness Nigeria, a subsidiary of the prestigious Diageo Plc of the United Kingdom. It opened its first brewery outside of Ireland and Great Britain in Lagos after its incorporation in 1962. With its brands widely successful in the country, the company believes in enriching its communities and it has been credited with laudable Corporate Social Responsibility projects in several communities in Nigeria.
The company ranks 49th among the Top 250 Companies in Africa with a capital base of $2.3 billion.
