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Total Nigeria, Guinness Record Losses on High Financing Costs
Total Nigeria Plc and Guinness Nigeria Plc have reported losses in their operations due to high financing costs. While Total posted a loss of N205 million in the nine months ended September 30, 2019 against a profit of N7.665 billion in 2018, Guinness Nigeria Plc recorded a loss of N370 million for the three months ended September 30, 2019, compared with a profit of N835 million in 2018.
Details of Total Nigeria’s unaudited nine months results showed a revenue of N221.835 billion in 2019, down marginally by two per cent from N226.915 billion in 2018.
Cost of sales stood at N196.7 billion in 2019, compared with N195.9 billion, making the petroleum products marketing firm to end with a gross profit of N25.1 billion in 2019 as against N30.9 billion in 2018.
Total Nigeria was able to reduce its selling and distribution costs from N3.317 billion in 2018 to N2.817 billion. However, administrative expenses rose from N14.261 billion to N17.502 billion, bringing its operating profit to N5.741 billion in 2019.
But an increase of 110 per cent net financing cost, which rose from N2.789 billion in 2018 to N5.858 billion made the company to end the nine months with a loss of N205 million, compared with a profit of N7.665 billion in 2018.
On its part, Guinness Nigeria Plc, whose shareholders approved a dividend of N4 billion for the last financial year, three days ago, began the new financial year with a loss of N370 million.
The brewing firm posted revenue of 26.898 billion in 2019, down from N28 billion in the first quarter of 2018. While the company was able to curtail the marketing/distribution and administrative expenses, net financing cost went up by 117 per cent to N1.287 billion in 2019, up from N593 million in 2018. Consequently, Guinness ended the Q1 with a loss of N370 million, compared with a profit of N835 million in 2018.
According to analysts at FBN Quest, the combination of higher excise taxes and weaker beer volumes impacted topline, while the interest cost increase was caused by a rise in total borrowings.
“The Q1 loss was significantly behind our profit before tax (PBT) forecast of N2.2 billion . On an annualised basis, the loss also disappointed consensus 2020E forecast of N8.5 billion. As such, we anticipate a negative market reaction,” they said.