Guinness Nigeria has announced a loss before tax of N73.68 billion (£35.5 million) for the financial year ending 30 June 2024, largely driven by the ongoing depreciation of the Naira. The results, which reflect the challenges facing the Nigerian economy, show that the weakening of the national currency, combined with other macroeconomic difficulties, led to the company’s substantial financial loss.
The company, a subsidiary of Diageo, reported that its forex losses were directly tied to the depreciation of the Naira, which has continued to slide in value. The exchange rate for the Naira moved from N759.03/US$1 at the start of the year to N1,540/US$1 by the close of the financial year. This dramatic decline resulted in an unrealised forex loss and contributed to the company’s overall loss before tax.
Economic challenges compounded by inflation and rising costs
Guinness Nigeria also faced a difficult macroeconomic environment, marked by high inflation, the removal of fuel subsidies, and widespread food insecurity. These factors created additional challenges for the company as it struggled to manage rising operational costs. The company reported a 37% increase in the cost of sales, driven by inflationary pressures on raw material prices, soaring utility costs, and the devaluation of the Naira.
Despite these significant challenges, the company managed to generate growth in certain areas, such as operating profit and revenue.
Positive performance in revenue and operating profit
Although the company faced a substantial loss before tax, Guinness Nigeria reported an increase in operating profit of 9%. Revenue for the year also grew by 31% compared to the previous year. This positive performance was more pronounced in the second half of the year, where revenue growth accelerated to 41%, up from 20% in the first half. The company’s ability to implement targeted price increases helped mitigate some of the rising costs.
Omobola Johnson, chairman of the board of directors at Guinness Nigeria, expressed confidence in the company’s resilience, stating, “We remain committed to continuously evaluating our strategy against the evolving business landscape to ensure we deliver returns to our shareholders and create long-term value for all stakeholders.”
Diageo sells its stake in Guinness Nigeria to Tolaram
In June 2024, Diageo announced its decision to sell its 58.02% shareholding in Guinness Nigeria to Singapore-based consumer goods conglomerate Tolaram. The deal, valued at 81.60 NGN per share, represents a 63% premium to the 30-day volume-weighted average price (VWAP) of the stock.
Diageo stated that this sale was part of a broader strategy to accelerate the growth of the Guinness brand in Nigeria, while creating a new model for the brand’s future in the country. As part of the agreement, Diageo will retain ownership of the Guinness brand and has entered into long-term license and royalty agreements with Tolaram.
The sale marks a significant shift in the operations of Guinness Nigeria, with Tolaram set to take the reins in the country while Diageo continues to focus on growing its brand presence through this new partnership model.
Looking ahead
Despite the challenging year, Guinness Nigeria’s management remains optimistic about the company’s long-term prospects. With a new strategic direction under Tolaram’s ownership, the brand aims to adapt to the evolving business landscape and continue to deliver value to both shareholders and consumers in Nigeria.