Foreign exchange expenses eroded the operating profit of Guinness Nigeria Plc for the year ended December 2023, resulting in an N5.233bn loss.

This was contained in the unaudited interim financial statements of the firm filed with the Nigerian Exchange Limited on Thursday.

shareholders of the brewer protested the non-declaration of an interim dividend for the period ending June 2023 at the 73rd Annual General Meeting of the group held in Lagos.

Addressing the concerns of shareholders, the former Managing Director, John Musunga, blamed the forex harmonisation policy of the Federal Goverrnment for the development.

He also argued that best practices when declaring dividends required the company to have great retained earnings or post profit.

“In this situation, our retained earnings declined quite a bit because we had to service that change in FX and our profit and loss position also became adverse as we recorded N18bn in losses. Good practice says that if you don’t have retained earnings or declare a loss, you don’t pay dividends,” Musungu said.

At the end of 2023, Guinness Nigeria’s revenue rose by 20.38 percent to N142.595bn.

However, the cost of sales, which rose to N96.656bn from N76.161bn, on the back of marketing and distribution expenses (N23.790bn), administrative expenses (N8.264bn) and the 255.79 percent jump in finance expense to N23.884bn from N6.713bn during this period.

This pushed the firm to a N5.233bn loss, compared to a profit of N4.024bn in 2022.

A breakdown of finance expenses provided by the brewer showed that forex was still a major issue for the firm.

The loss on remeasurement of foreign currency balances was a major contributor to the jump, followed by exchange differences on foreign currency loans and accrued interest.

Last October, Guinness announced it was planning to stop the importation and distribution of certain Diageo international premium spirits effective from April 2024.

It said that its discontinuation of the importation of spirits from the multinational alcoholic beverage company would reduce its foreign exchange requirements.

Also, Diageo will be setting up a Nigerian arm this year due to the discontinuation of the importation of its spirits.

Diageo’s new Nigerian business will be solely spirits-focused. Some of the popular products of the brand include Johnnie Walker, Singleton, and Baileys and others.

Guinness Nigeria, which is a subsidiary of Diageo, incurred N49bn in exchange rate loss in its 2023 half-year operations and had in August revealed challenges with accessing forex for its operations despite the harmonisation of the segments of the currency market by the Central Bank of Nigeria in June.