Guinness Nigeria Issues profit warning due to Covid-19, asset impairment
Guinness Nigeria has announced a profit warning against its 2019 financials due in August, as beer brewer said it expected the impact of coronavirus pandemic to eat deep into its profitability.
The company’s financial year ends on June 30, and the audited result will be released in August, according to a regulatory filing by the local unit of Diageo.
Profit warning occurs when a company advises shareholders and the public that its earnings results will not meet analyst expectations.
A company generally issues a profit warning prior to the public announcement of its official earnings results.
“Due to a combination of the impact of COVID-19 and the asset impairment, we expect the profitability of the Company for the Financial Year to 30th June 2020 to be impacted.
“The Company’s balance sheet, however, remains strong, and this gives the Board the confidence that the Company has the right resources to continue to deliver the strategy,” the company said in the regulatory filing to the Nigerian Stock Exchange.
Guinness Nigeria had last year declared a final dividend of N1.52 per share, which amounts to N4 billion for the financial period ended, June 30, 2019.
The company said the adverse impact of the sharp contraction in economic activities and the knock-on effect of the COVID-19 lockdown took a toll on the on-trade segment of the business across all our markets. Production and revenues have thus been negatively affected.
Beverages Industry Faces Hard Time As Covid-19 Impacts Sales, Workforce
“Guinness Nigeria carried out a comprehensive review of its asset base and made a strategic decision to impair a certain category of assets, which were generating suboptimal returns. This is in line with the company’s long-term
strategy of delivering value to shareholders,” the company said.
last month, Global Financial Digest exclusively reported that Nigeria’s beverages manufacturing companies are yet to come out with the quantum of losses incurred during lockdown caused by government efforts to curtail the spread of coronavirus in the country, but experts say the industry is reeling under huge drop in patronage as people stayed home.
Big names like Nigeria Bottling Company, 7Up Bottling companies, Nigerian Breweries, Guinness Nigeria, and other breweries firms are currently weighing the options of downsizing their large workforce in view of the sharp drop in sales due to restrictions in movements which impacted on the consumption of their products.