Guinness Nigeria Records N60.45 Billion Loss, First in Five Years Amid Rising Costs and Forex Pressures

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Guinness Nigeria Plc has reported a N60.45 billion loss before tax for the nine months ending in March 2024, marking its first loss in about five years due to increased costs and foreign exchange pressures. This is a stark contrast to the N9.94 billion profit recorded during the same period the previous year.

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Operating expenses surged by nine percent to N48.50 billion from N44.43 billion the previous year. Additionally, the company’s income tax dropped to N1.2 billion from N4.1 billion, resulting in an after-tax loss of N61.65 billion.

The brewery company took a $22.5 million loan from its parent company, which is expected to be repaid within the current fiscal year. The float in exchange rates in 2023 led to an 89 percent increase in foreign exchange loss, amounting to N83 billion. This forex loss significantly contributed to its finance expense, which rose to N90.2 billion from N9.3 billion the previous year.

Analysts at CardinalStone expect these cost pressures to persist in the coming quarters, driven by rising inflation on locally sourced raw materials and forex volatility affecting imported products. Despite these challenges, Guinness Nigeria saw a 27 percent increase in revenue, reaching N220.30 billion from N172.47 billion, due to increased local sales.

Looking ahead, CardinalStone analysts anticipate a recovery in EBIT margin to 10.2 percent for the full year 2024/25, aided by localized raw materials, improved export earnings, and reduced foreign currency exposure following the settlement of FX-denominated borrowings.

The recent sale of a 58.02 percent stake to Tolaram and the subsequent long-term license and royalty agreements for the production of the Guinness brand are expected to yield synergistic benefits and strong revenue growth. The company is also set to leverage Tolaram’s distribution networks and efficient supply chain for cost savings, while lower AGO prices are likely to further​⬤

Babatunde Akinsola
Babatunde Akinsolahttps://naija247news.com
Babatunde Akinsola is aNaija247news' Southwest editor. He's based in Lagos and writes on the Yoruba Nation political issues, news and investigative reports

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