Guinness Nigeria plc, the local unit of international drinks company Diageo plc, posted a loss of 2 billion naira ($6.4m) for the last year ended in June. Profit plummeted 14% to 102 billion naira ($335.5m).
This year’s report was the first to includenot only the beer business but also the sales of International Premium Spirits (IPS) like Johnnie Walker and Baileys. Guiness Nigeria bought the distribution rights for those spirits from its parent company, Diageo, in January 2016.
In a statement to investors Peter Ndegwa, Managing Director and CEO of the Nigerian company explained the reasons for the bad results: “Our performance this year was impacted by two major factors, one being the very tough economic challenges around consumer spending, driving consumer preferences towards value brands across the sector, the other, and more significant factor being the effect of FX policy and the devaluation of the Naira. When you take out the impact of the latter, our underlying performance for the year was broadly in line with the prior year in spite of the pressure on the top line.”
Price pressure increased in Africa’s most populous country when the Central Bank of Nigeria removed the peg of the naira to the dollar dollar after more than a year. Since June the currency has lost almost 40 percent of its value against the dollar. The increased inflation of 17.1% put the brakes on economic growth.
In order to cut costs, Guinness plans now to invest £12m (15.6m) in a plant in Benin City. The plant in the south of the country is aimed to produce mainstream spirits and locally produced drinks that are offered at a lower price point when compared to imported ones.
