Guinness Nigeria posted a loss of N5.233 billion in operating profit for the half year that ended in December 2023 (Q2 2024) because of foreign exchange expenses.

The company’s unaudited interim financial results, which were submitted to the Nigerian Exchange Limited.

At the 73rd Annual General Meeting of the group, which was held in Lagos, shareholders of the brewer objected to the non-declaration of an interim dividend for the period ending in June 2023.

In response to shareholder concerns, former managing director John Musunga attributed the development to the federal government’s FX harmonization program.

The company’s 385.8% increase in financial expenses can be ascribed to a N21.5 billion loss that resulted from the exchange rate revaluation.

This loss is divided into three parts: N3.66 billion from the exchange difference on foreign currency loans, N596.74 million from the exchange difference on letters of credit, and N17.28 billion from the remeasurement of the company’s foreign currency reserves.

Additionally, he contended that the corporation needed to have strong retained earnings or post-profit to follow best practices when distributing dividends.

“In this case, we had to service that FX fluctuation, which resulted in a significant reduction in our retained earnings. We also recorded N18 billion in losses, which negatively impacted on our profit and loss position. According to best practices, dividends should not be paid out if there are no retained earnings or if a loss is declared, according to Musungu.

Guinness Nigeria’s income increased by 20.38 percent to N142.595 billion by the end of 2023.

However, due to marketing and distribution costs of N23.790 billion, administrative costs of N8.264 billion, and a 255.79% increase in financing expense to N23.884 billion from N6.713 billion during this time, the cost of sales increased to N96.656 billion from N76.161 billion.

The company lost N5.233 billion as opposed to making N4.024 billion in profit in 2022.

A dissection of the brewer’s financing costs revealed that currency remained a significant problem for the company.

Exchange discrepancies on foreign currency loans and interest incurred were the next biggest causes of the increase, after the loss on remeasurement of foreign currency holdings.

Guinness Nigeria in the fourth quarter of last year declared that, as of April 2024, it will no longer be importing or distributing specific Diageo international premium spirits.