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Guinness Nigeria First-Half Profit Declines 22% on Weak Spending

Feb. 17 (Bloomberg) -- Guinness Nigeria Plc, the West African nation’s second-largest brewer, said first-half profit declined 22 percent as sustained weakness in consumer spending caused a slump in beer sales.

Net income fell to 5 billion naira ($30.7 million) in the six months through December, compared with 6.42 billion naira a year earlier, the local unit of London-based Diageo Plc said today in a statement on the Nigerian Stock Exchange website. Revenue declined 13 percent to 52.8 billion naira.

Disposable income “continues to be challenged” by an increase in gasoline prices two years ago, Guinness Nigeria Chief Executive Officer Seni Adetu said on a conference call today. While the beer market in Africa’s most populous country showed some recovery in the second quarter, government spending in order to secure votes ahead of elections next year hasn’t been as strong as expected, impacting sales, he said.

Parent company Diageo, the world’s biggest distiller, said Jan. 30 a slowdown in emerging markets including China and Nigeria weighed on first-half sales growth. The brewer joins companies from Unilever NV to Remy Cointreau SA that are seeing a slowdown in previously fast-growing regions due to fluctuating currencies, economic turmoil and government crackdowns.

Guinness Nigeria’s share price fell 4.7 percent to 192 naira at the close of trading today in Lagos, the lowest level since April 2011. The stock has dropped 19 percent this year, compared with a 5.7 percent decline on the Nigerian Stock Exchange All-Share Index.

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

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

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