Guinness Nigeria Falls Most in 2 Months on Profit: Lagos Mover

Guinness Nigeria Plc, the West African nation’s second-largest brewer, had its biggest retreat in almost two months after posting a 16 percent decline in first-half profit.

The shares of Diageo Plc’s local unit fell 1.8 percent to 291 naira at the close in Lagos, the commercial capital, the biggest drop since Dec. 19. The stock has risen 5.8 percent this year, compared with a 19 percent rally for the Nigerian Stock Exchange All-Share Index.

Net income slid to 6.42 billion naira ($40.8 million) for the six months ended Dec. 31, from 7.62 billion naira a year earlier, Guinness Nigeria reported yesterday. Inflation in Africa’s most populous nation boosted raw material costs and crimped consumer spending on beer and non-alcoholic beverages, Chief Executive Officer Seni Adetu said on a conference call.

A slowdown in volume growth “has been visible in the financials for a number of quarters now, due to a combination of market share loss and a squeeze on household incomes,” Tunde Abidoye, a Lagos-based analyst at FBN Capital Ltd., wrote in an e-mailed note to clients today. FBN Capital cut its earnings per share forecast by 8 percent over the 2013 to 2015 period and kept its rating on the stock as underperform, he said.

Consumer-price inflation stayed above 10 percent last year in Nigeria after the government increased the cost of fuel and the country’s two biggest rivers overflowed their banks, killing 363 people and damaging farmland.

Trade in the north of the country has also suffered from unrest stirred by the Islamist militant group Boko Haram, Adetu said. Boko Haram has carried out gun and bomb attacks in the mainly Muslim north and the capital, Abuja, in which hundreds have been killed since 2009.

Consumer demand is unlikely to deteriorate further in the fiscal second half, Adetu said yesterday.

To contact the reporter on this story: Chris Kay in Abuja at ckay5@bloomberg.net

To contact the editor responsible for this story: Vernon Wessels at vwessels@bloomberg.net

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