Guinness Ghana Falls 1st Time Since May on Costs: Accra MoverMoses Mozart Dzawu
Diageo Plc’s Ghanaian unit fell for the first time since May on speculation that earnings may decline after the company raised prices to combat higher production costs.
Guinness Ghana Breweries Ltd.’s stock dropped 0.2 percent to 6.19 cedis by the close in the capital, Accra. Trading volume was 36 percent of the three-month daily average. The shares are the best performer on the Ghana Stock Exchange’s Composite Index this month after Ecobank Ghana Ltd., rising 14 percent.
The company, which brews Guinness beer, Star lager and Alvaro, a fizzy fruit beverage, raised the price of some drinks by as much as 10 percent, Managing Director Peter Ndegwa said yesterday. Volume may fall by about 10 percent in the fiscal year through June 2014 as a result, he said.
“Investors are concerned about the company’s earnings going forward,” Nana Kofi Agyeman Gyamfi, a stock trader at Merban Brokers Ltd. in Accra, said by phone. “The price adjustments make some of their products more expensive than competitors and that may decrease demand.”
Costs rose this year as the government scrapped fuel subsidies on gasoline and diesel. This month, the government raised water tariffs by 52 percent and electricity rates by 79 percent. Guinness Ghana’s net income plummeted to 177,000 cedis ($79,900) in the fiscal first quarter to September from 4.7 million cedis a year earlier, the company said on Oct. 29.