Guinness Nigeria Plc, a prominent player in the beverage industry, faced significant challenges during the year ending June 2023, as revealed in its full-year financial results. One of the major setbacks was an eye-catching N49 billion exchange rate loss. Consequently, the company reported a loss per share of N8.29 kobo, compared to N7.15 earnings per share in the previous year.
Despite this setback, the company also demonstrated resilience and posted several positive highlights. Revenue for the year reached N229.2 billion, representing a 10.9% year-on-year increase. The gross profit amounted to N78.1 billion, up by 7.5% from the previous year. However, the operating profit experienced a slight dip of 2.3%, settling at N23.3 billion.Net finance costs spiked dramatically to N45.4 billion, soaring by a staggering 20,040.1%. This, along with other factors, contributed to the company’s loss after tax, which amounted to N18.1 billion, reflecting a significant decline of 216.1%.
The impact of foreign exchange depreciation was the primary driver behind the company’s loss. Adjusting for the extraordinary forex loss of N49 billion, Guinness Nigeria reported a robust operating profit of N23.5 billion. This indicates that, without the forex charge, the company would have recorded strong profits.It is worth noting that despite the challenges, Guinness Nigeria declared a substantial dividend of N15.6 billion, a sharp increase compared to N1 billion in the previous year. This dividend declaration reflects the company’s confidence in its long-term prospects and its ability to manage the impact of the exchange rate losses on its cash balances.
Insights from the financials reveal that the company faced forex exposure in various aspects of its operations. Guinness Nigeria has both related parties and letters of credit-related loans denominated in foreign currencies. Additionally, trade and other payables in forex further contributed to the impact of the exchange rate fluctuations.
Nonetheless, the company reported an unrealized exchange rate gain of N5.5 billion on foreign currency balances, providing some relief amid the challenging economic conditions.
Despite experiencing its first full-year loss since 2020 due to the adverse effects of exchange rate fluctuations, Guinness Nigeria’s resilience and strategic management remain evident. As the company continues to navigate through the financial challenges, it remains well-positioned to harness opportunities and maintain its leading position in the market.
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