Guinness posts over N5bn loss

Guinness Nigeria Plc recorded a loss of N5.233 billion for the year ended December 2023, as foreign exchange expenses adversely impacted its operating profit.

The unaudited interim financial statements, filed with the Nigerian Exchange Limited, revealed the financial downturn.

During the 73rd Annual General Meeting held in Lagos, shareholders expressed dissatisfaction with the non-declaration of an interim dividend for the period ending June 2023. Former Managing Director John Musunga addressed shareholders’ concerns, attributing the company’s challenges to the Federal Government’s forex harmonization policy.

Musunga clarified that the company’s retained earnings significantly declined due to the foreign exchange adjustments, resulting in a profit and loss position of N18 billion in losses. According to him, adhering to best practices necessitates having substantial retained earnings or posting a profit before declaring dividends.

In 2023, Guinness Nigeria’s revenue saw a 20.38% increase to N142.595 billion. However, rising costs of sales, driven by marketing and distribution expenses (N23.790 billion) and administrative expenses (N8.264 billion), coupled with a substantial 255.79% surge in finance expenses to N23.884 billion, led to a loss of N5.233 billion. This marked a significant downturn from the N4.024 billion profit recorded in 2022.

A detailed breakdown of finance expenses revealed that foreign exchange challenges remained a significant issue for the company. The loss on remeasurement of foreign currency balances played a pivotal role in the negative financial outcome, along with exchange differences on foreign currency loans and accrued interest.

To mitigate foreign exchange requirements, Guinness announced last October its intention to discontinue the importation and distribution of certain Diageo international premium spirits, effective April 2024. The decision aims to reduce the company’s exposure to forex fluctuations. Additionally, Diageo plans to establish a Nigerian arm in response to the cessation of spirits importation.