Guinness Nigeria Plc has reported a pre-tax loss of N73.6 billion for the financial year ended June 30th, 2024, as forex devaluation impacted bottom lines.
The company released its full year earnings showing losses continued into its fourth quarter of the year largely due to the impact of forex depreciation on its foreign currency loans.
Guinness reports its year end every June 30th .
The brewery giant recently received a new owner as its parent company Diageo Plc sold its majority shared to Tolaram Plc.
The company’s pre-tax loss posted in FY 2024 represents a 233% decline from the N22.1 billion pre-tax loss posted in the previous financial year.
However, the company’s revenue during the financial year appreciated by 30.5% to N299.5 billion, from N229.4 billion as of FY 2023.
According to the financial statement, Guinness incurred a total FX revaluation loss of N112.3 billion during the financial year, up by 129% from the N49.1 billion loss incurred in FY 2023.
Key Highlights FY 2024 vs FY 2023
Revenue: N299.5 billion, +30% YoY
Cost of sales: N208 billion, +37% YoY
Gross profit: N91.5 billion, +17% YoY
Marketing and distribution expenses: N49.7 billion, +20% YoY
Operating profit: N25.4 billion, +9% YoY
Net finance costs: N99.1 billion, +118% YoY
Loss before income tax: -N73.7 billion, -233% YoY
Loss for the year: -N54.8 billion, -201% YoY
Total assets: N226.1 billion, -6% YoY
Cash generated from operating activities: N100.4 billion, +75% YoY
Commentary: During the financial year under review, the company’s raw materials cost increased to N149 billion, reflecting a 40% appreciation from the N106.6 billion raw materials posted in 2023.
Guinness’s trade receivables net expected credit loss for the financial year was about N12.1 billion, reflecting a 21% appreciation from the N10 billion posted in the previous fiscal year.
Relationship with Diageo International
According to the financial statement, the company has a $22.5 million outstanding loan to Diageo Plc. At the end of the financial year ending June 30, 2023, the face value of the loan was N17.9 billion.
However, at the end of 2024 financial year, the loan had a face value of N39.3 billion.
A review of the company’s loans and borrowings shows that at the end of the 2024 financial year, it had letters of credit liabilities of about N814 million to five banks.
This is a significant decline from N45.8 billion at the end of the previous financial year.
The decline in letters of credit reflects a strategy adopted by Nigerian subsidiaries of foreign-based companies in recent periods to mitigate the impact of the scarce FX on their balance sheets.
These companies increased their intercompany liabilities utilizing them to acquire raw materials or foreign exchange.
As the intercompany loans were at more favorable conditions than regular bank credits.
Recall that Guinness Nigeria’s relationship with Diageo International is set to take a new turn, as the group recently sold its majority stake in Guinness Nigeria to Tolaram.
