Guinness Nigeria Posts First Loss in 30 Years as Downturn WeighsBy
Guinness Nigeria Plc, the country’s second-biggest brewer, posted its first loss in at least 30 years as a downturn in Africa’s most populous nation increased costs and cut demand for its brands.
The local unit of Diageo Plc posted a loss of 2 billion naira ($6.4 million) for the 12 months through June compared with a profit of 7.8 billion naira a year earlier, it said in an e-mailed statement on Tuesday. Revenue dropped 14 percent to 102 billion naira due to the “effect of foreign-exchange policy and the devaluation of the naira’’ and a weak economy, Chief Executive Officer Peter Ndegwa said in the statement. Operating profit plunged to 4.4 billion naira from 15.7 billion naira.
The currency has lost almost 40 percent of its value against the dollar since June, when the Central Bank of Nigeria removed the peg of 197-199 naira per dollar after more than a year. That increased price pressures in the nation that imports goods from fuel to industrial inputs. Gross domestic product contracted by 2.1 percent in the three months through June from a year earlier, while inflation accelerated to 17.1 percent in July, the highest rate since October 2005. The economy is on track to shrink 1.8 percent this year, according to the International Monetary Fund.
Guinness plans to invest 12 million pounds (15.6 million) in a plant in Benin City, in the south of the country as it seeks to cut costs, while it will consider selling Guinness stout and the herbal drink Orijin in South Africa to attract foreign exchange, Ndegwa said in a Sept. 9 interview.
The company’s shares closed at 100 naira on the Nigerian Stock Exchange in Lagos. The stock is down 17 percent since the start of the year, compared with a 5.4 percent gain by Nigerian Breweries Plc, the biggest beer maker controlled by Heineken NV. The Nigerian Stock Exchange All Share Index has retreated 1.5 percent this year.