Guinness Posts Less than Impressive H1, 2012 Earnings

Guinness Nigeria Plc has released its 1H, 2012 results representing the period from June 2011 to December 2011. The company posted a marginal growth in sales as it recorded a turnover of N 62.8 billion as opposed to the N 59.2 billion it recorded over the same period the preceding year.

Costs were up slightly as marketing, administrative and distribution expenditure for the company rose 20.34% to N 16.5 billion from N 13.7 billion over the same period the preceding year.

Net Income fell as a result of the less than impressive performance. Profit After Tax was N 7.15 billion from N 7.34 billion in the preceding year. A marginal drop of just less than 3%.

Analysts do not expect the company to achieve anything very spectacular in the remainder of the year. This is attributed to the decrease in disposable income for fringe purchases like beer as a result of the partial removal of the fuel subsidy.

Ryno Truter, an analyst with Renaissance Capital stated via an emailed report, “This is not a strong result for Guinness Nigeria in our view, and indicates that sales growth might remain softer for longer. During the remainder of FY12 we expect the phasing out of the fuel subsidy and higher inflation to put pressure on disposable income, and therefore beer sales, while increasing concerns around security and potential terrorist threats could further dampen on-trade consumption. Higher fuel charges and continued distribution issues could also lead to additional pressure on operating margins.”