Commenting on the results, Mr. Peter Ndegwa, the company’s Managing Director and Chief Executive Officer, stated that sales revenue came under pressure, declining by 9.8%, as the operating environment weakened further.
Mr. Ndegwa noted that the contraction in economic activities during the period negatively affected the company’s business.[pro_ad_display_adzone id=”70560″]
“A significant erosion of consumer disposable income and consequent down-trading by price sensitive consumers took its toll on the industry and affected top line growth. In spite of the deterioration in the economy, our premium core brands showed recovery and resilience during the period with Guinness Foreign Extra Stout and Malta Guinness recording double digit shipment growth reflecting momentum against a weak period. Satzenbrau also performed strongly during the period with half year net sales growth of 54% as the brand builds its position in the growing value beer segment. However, this was not sufficient to impact the operating profit which declined by 51.6% during the period.”
“We have maintained our marketing investments despite these headwinds as we launched the first Guinness stout innovation in ten years with Guinness Africa Special just before Christmas and leveraged our “Every Minute Made of Black” National Consumer Promotion campaign to drive consumer affinity for the brand,” the MD explained.
He continued: “In the second half, we expect to see some improvement in sales with innovation and the distribution of Diageo’s international premium and mainstream spirits brands which have been integrated into our business, although the set up costs mean that the operating margin is not expected to benefit until the next financial year. However, this is subject to an improvement in the trading environment which remains volatile with speculation of possible currency devaluation, non-availability of foreign exchange even for eligible transactions and inflationary pressure”
Guinness Nigeria recently acquired the right to distribute Diageo Plc’s international Premium Spirits (IPS) brands in Nigeria in December 2015. The company also announced the acquisition of the right to distribute McDowell, a United Spirits Limited brand in January 2016. These acquisitions fill the gaps in the spirits brand base of Guinness Nigeria, allowing it to compete across all categories of the alcoholic beverage market in Nigeria thereby deepening its operations and boosting its balance sheet growth potential in 2016 and beyond.