Guinness Nigeria Plc, a subsidiary of Diageo Plc, has announced its audited results for the period ended 30 June, 2020 revealing a decline in loss after tax at N12.57bn resulting from the significant impact of COVID-19 lockdowns and ongoing economic challenges.
The audited results which were released to the Nigerian Stock Exchange (NSE) at the financial year-end indicated that revenue decreased 21% to N104.376bn versus the prior period of 2019.
Profit was impacted by a number of one-off accounting adjustments totaling N17.2b, as well as volume declines due to the prevailing economic and COVID-19 impacted conditions. This led to a net loss after tax of N12.6b.
READ: UACN’s major shareholder sells substantial shares
Excluding the accounting adjustments, the underlying performance remains strong despite the impacted top line performance.
Highlights
• Revenue decreased 21%
• Operating profit declined 243%
• Cost of sales declined 22%
• Net finance charges at N4.24billion
Speaking on the announcement, Mr. Baker Magunda, Managing Director/CEO, Guinness Nigeria Plc said: “The last quarter performance of fiscal 2020 was significantly impacted by restrictions due to COVID-19, exacerbating the already challenging economic environment. Closures of on-trade premises (bars, lounges, clubs and dine-in restaurants) which represent the major part of the consumption occasion for our products; and bans on celebratory occasions impacted sales.
READ MORE: Faltering Guinness pays bumper dividends but Diageo rakes in billions in royalties
“Demand was also impacted by reduced consumer income, unemployment concerns due to the shutdown of a large number of businesses, and increases of VAT and excise throughout the year.
“Distribution was further impacted by the ban of inter-state, and in some cases intra-state travel. Although Management worked diligently with regulatory authorities to minimise the impact, this hampered our distributors ability to restock and have our brands available for purchase.”
The company however revealed that its reaction to the challenges presented by the COVID-19 lockdown in Q4 was centered around reducing risk to the business by focusing on cash delivery, reducing distributor inventories, and fast-tracking the ongoing distribution transformation project for efficient sales operations. This focus ensured a reduction of trade receivables by 88% over same period last year.
READ: PWC report details how COVID-19 will impact Nigerian FinTechs
“We also focused on cost management by reacting to the drop in demand by reducing operations for a month. Agile actions taken in the period impacted by COVID-19 complemented the work already undertaken throughout the year to reduce Cost of Sales by year end,” Magunda said.
The Chairman of the Board of Guinness Nigeria Plc, Babatunde Savage assured that “the Board will continue to support the Management in its efforts to sustain global best practices aimed at consistently delivering business growth for stakeholders.
Get corporate data from Nairametrics on Nairaytics
“We remain confident that the strategy is comprehensive and robust, and that we are making the right investments in the company to ensure our long-term competitiveness.”
