Guinness Nigeria Gets Loan From Diageo After Reporting N2bn Loss After Tax
Guinness Nigeria has received a $95 million loan from its parent company, Diageo to help it cope with dollar shortages caused by a slump in crude prices in the international market and the effect of economic recession in Nigeria after it declared N2bn loss after tax.
The company announced its first set of results early this week, the results combined sales from both beer as well as International Premium Spirits (IPS) like Johnnie Walker and Baileys, following its acquisition of distribution rights from its parent company, Diageo in January this year. The company reported revenues of N102bn in its financial results for the period ended June 30 2016 resulting in an overall Loss After Tax of N2bn when compared to the same period last year.
Speaking on the results, Peter Ndegwa, Managing Director/Chief Executive Officer, Guinness Nigeria Plc said that the combination of a tough economic environment and challenges with naira devaluation had a significant impact on Guinness Nigeria’s overall performance. “Our performance this year was impacted by two major factors, one being the very tough economic challenges around consumer spending, driving consumer preferences towards value brands across the sector, the other, and more significant factor being the effect of FX policy and the devaluation of the Naira. When you take out the impact of the latter, our underlying performance for the year was broadly in line with the prior year in spite of the pressure on the top line.”
Babatunde Savage, Chairman, Guinness Nigeria Plc, said: “Despite the continuing deterioration in the operating environment, the Board is pleased to note that our core brands of Guinness FES and Malta Guinness are in growth and we now have a strong participation in the growing value segment of the market through Satzenbrau and Dubic. We have also started to see early signs that our decisions to acquire the distribution rights in Nigeria to the International Premium Spirits brands of Diageo and to invest in local capacity for spirits manufacturing are the right ones for the business.”
In January 2016, Guinness Nigeria acquired the distribution rights for Diageo, its parent company’s International Premium Spirits (IPS) like Johnnie Walker, Ciroc and Baileys in Nigeria. Also in the course of the financial year, the company acquired the rights to distribute brands from India’s United Spirits Ltd (USL) for brands like McDowell’s whisky. Guinness has also announced an investment of GBP12m into its Benin plant for the manufacture of mainstream spirits, locally produced spirits that are offered at a lower price point when compared to imported spirits.
Ndegwa continued: “Following the acquisition of distribution rights for IPS and USL brands, we are the first and only total beverage alcohol (TBA) business in Nigeria offering the widest range of drinks – from adult premium non-alcoholic drinks (APNADS) to lager, stout, mainstream spirits and IPS. This puts us in a great position to continue to offer consumers quality brands, giving them a choice at every category and price point.
“Additionally, innovation continues to be a strong platform for us, we have a highly successful track record with about 60% of our beer and non-alcoholic business now comprised of innovation products launched in the past four years. So innovation continues to be one of our competitive advantages in this market and we have a strong innovation pipeline into F18”
“This is testament to our intention to continue to invest behind growing the Nigerian market for both beer and spirits. Despite the economic headwinds, we continue to be deeply committed to doing business the right way being guided by our Code of Business Conduct ensuring that we engage, in the right way, with everyone that comes into contact with our company.”