Diesel, freight costs drive distribution expenses as Guinness’ profit hits N15.28bn

Notwithstanding a profit after tax of N15.28 billion in its third quarter (Q3) ended March 31, 2022, an increase of 731 per cent from N1.84 billion reported in the unaudited third quarter (Q3) ended March 31, 2021, Guinness Nigeria’s distribution expenses, occasioned by rising diesel inflation and freight costs, rose by 36 per cent within the period.

It would be recalled that higher oil prices in the first quarter of the year, affected local refined products as diesel was dispensed at over N650 per litre in many filling stations across the country, up from about N300 a litre the previous quarter.

The company reported a revenue of N159.4billion in Q3 2022, which represents a 39 per cent growth over the N114.96 billion reported in Q3 2021. The company’s cost of sales increased by 24 per cent, largely due to inflationary pressure, sales volume growth, forex devaluation impacting imported materials, air freight cost increase and a shift towards more expensive can products. The Company also noted that its marketing expenses increased 68 per cent versus last year as it increased its marketing investments.

Commenting on the announcement, Managing Director/CEO, Guinness Nigeria, Baker Magunda in a statement said: “In the first nine months of fiscal 2022, Guinness Nigeria continued to grow on the back of the strong recovery in the first half of fiscal 2022.

“The business has delivered growth in the face of the challenging operating environment characterized by rising inflation and forex challenges in the three months ended March 31, 2022. Revenue grew by 39 per cent to N159.4 billion benefitting mainly from price increases across all brands, as well as from favorable brand mix and resilient consumer demand”. He added that gross profit grew 76 per cent in the period as revenues grew ahead of cost of sales.

“We increased marketing investment to support our strategic growth priorities and the recovery of the on-trade. Distribution expenses also increased 36 per cent driven by higher volumes, freight and diesel inflation and extended journey time for road transportation. All of our efforts delivered an operating profit growth of 200 per cent to N22.9 billion,” Magunda added.