One of Nigeria’s well-known breweries, Guinness Nigeria Plc, just disclosed its half-year financial statements for the period ending December 31, 2023, and it revealed that the company is facing serious financial difficulties.
Pre-tax losses for the company in H1 2024 totaled N4.43 billion, a startling 161.3% year-over-year decrease from the N7.23 billion profit reported during the same period in the prior fiscal year.
I’m going to reveal the details of Guinness Nigeria’s H1 2024 financial difficulties in this article, along with key tactics for the company’s recovery.
Guinness Nigeria Faces Financial Challenges With H1 2024 Pre-Tax Loss of N4.43 Billion
H1 2024 Performance Description
Guinness Nigeria reported a significant pre-tax loss of N8.25 billion for the second quarter that ended on December 31, 2023 (Q2 2024), a 358.4% decrease from the N3.19 billion profit reported for the same period in 2023.
In H1 2024, the company recorded sales of N142.6 billion, a remarkable 20.4% year-over-year increase from the same time in the previous fiscal year, despite these obstacles.
Revenue in the second quarter of 2024 was N83.06 billion, up 26.6% from the same quarter the previous fiscal year.
- The report’s main highlights are Q2 2024 (Q2 2023, YoY% Change).
- Revenue: N83.06 billion, or 26.6% of N65.60 billion.
- Sales Cost: N55.26 billion (+33.0%) on N41.55 billion
- N27.80 billion (N24.05 billion, +15.6%) was the gross profit.
- Operating profit: N8.52 billion (net present value of N6.64 billion, +28.3%)
- Net financing expense (N3.45 billion + 385.8%) = N16.77 billion.
- Net loss (-)/earnings before taxes: -358.4% or N8.25 billion (N3.19 billion).
- For the period, the loss (-)/profit was -N7.83 billion (N1.28 billion, -713.7%).
Exchange Rate Difficulties
The company’s financial problems can be largely attributed to the 385.8% increase in finance expenses, which is mostly the result of a N21.5 billion loss brought on by the revaluation of the currency rate.
This loss can be broken down into three separate amounts: N3.66 billion from the exchange difference on foreign currency loans, N596.74 million from the exchange difference on letters of credit, and N17.28 billion from the remeasurement of the company’s foreign currency balances.
Despite suffering an N3.56 billion foreign exchange loss in the first quarter of 2024, Guinness Nigeria Plc was nevertheless able to report a pre-tax profit of N3.82 billion and a net income of N2.6 billion.
This loss represented an increase of 134.8% year over year as compared to the same quarter in the preceding fiscal year.
Guinness Nigeria Faces Financial Challenges With H1 2024 Pre-Tax Loss of N4.43 Billion
Finally, a mainstay of Nigeria’s brewing sector, Guinness Nigeria is navigating a challenging financial environment as it reported a significant pre-tax loss of N4.43 billion in the first half of 2024.
The company’s performance, which is hampered by a sharp drop in profit and rising costs, highlights how serious the problems are that it faces in a changing economic landscape.
Guinness Nigeria’s financial stability has suffered as a result of exchange rate swings, even with the company’s impressive revenue growth.
The in-depth examination of the losses resulting from the exchange rate revaluation sheds light on the particular factors that are causing the company’s financial difficulties.
To minimize the effects of fluctuations in exchange rates and solve the fundamental issues hurting its financial performance, Guinness Nigeria must take strategic action going forward.
To restore its financial stability and effectively deal with the ongoing problems in the market, Guinness Nigeria would need to take proactive steps, such as risk management methods and operational efficiency improvements.
