Business Guinness Nigeria's First-Half Profit Declines 22% Due to Nigerians' Weak Spending

Vunderkind

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Guinness Nigeria Plc (GUINNESS), the second-largest brewer in West Africa has reported a first-half profit decline of 22 percent as a result of a sustained weakness of consumer spending.

In six months (through to December), net income fell to 5 billion naira ($30.7 million), compared with 6.42 billion naira in the previous year, according to data from Diageo Plc (DGE, based in London). Guinness’ revenue has dropped by 13% to 52.8 billion naira.

An increase in gasoline prices two years also has also challenged Guinness’ disposable income, according to the CEO, Seni Adetu. Though the beer market in Nigeria showed promising recovery in the second quarter, government expenditure to secure votes ahead of elections next year hasn’t been as strong as anticipated, and this has negatively impacted sales.

Diageo, parent company and the world’s largest distiller, on January 30 said that the slowdown in emerging markets like China and Nigeria impacted the first-half sale figures. Guinness is one of other countries like Unilever NV to Remy Cointreau SA that are experiencing a lag in previously fast-growing economies due to currency fluctuations, government crackdowns and economic upheaval.

At the close of yesterday’s trading in Lagos, Guinness Nigeria’s share price fell by 4.7% to N192, the lowest since April 2011. The stock has dropped by 19% this year, as compared with a 5.7% decline on the Nigerian Stock Exchange All-Share Index (NGSEINDX)

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