* YtD now -33.7%
By Emeka Anaeto, Economy Editor
LAST week’s decision of Diageo Plc, owners of Guinness Overseas Ltd, the parent company of Guinness Nigeria Plc, to reverse its planned acquisition of additional 15.7 per cent equity stake in the Nigerian operation has worsened returns on investments in the stocks of the Nigerian entity .
Year-to-date, YtD, investment returns of the company’s shares deteriorated further at close of market yesterday to -33.7 per cent from -18.6 per cent registered just before the announcement of the decision.
The stock investment returns had seen significant underperformance since this year standing at -21.1 per cent just before it announced an abyssimal first quarter results on September 21, 2016.
However, contrary to market reactions to what investment community saw as withdrawal of confidence signaled by the investment decision of Guinness Overseas, executives of the Guinness Nigeria think otherwise.
The Nigerian executives also believe the company would weather the current storm and return to profitability soon.
Director of Corporate Relations, Mr Sesan Sobowale, told Vanguard last weekend that the company has the right strategy to make this happen, urging the shareholders to remain steadfast. He stated: “Guinness Nigeria is committed to Nigeria for the long term and while, like other businesses, we are feeling the effect of the operating environment, we believe that we have the right strategy to reposition the business and return it to profitability as soon as possible.
“Some of the areas which give us hope is our unrivalled portfolio of beer, soft drinks and spirits and the fact that we are constantly focused on reducing operational cost to enhance our ability to run a profitable operation.
“Our shareholders should therefore be encouraged by the fact that we are building a resilient business able to weather the temporary economic storm and return value to their investment”.
While communicating the decision of the foreign investors to backtrack their planned equity step-up, Company Secretary of Guinness Nigeria, Rotimi Odusola, had said that in the light of the challenging market conditions in Nigeria over the past 12 months, Guinness Overseas would focus its resources on continuing to support Guinness Nigeria.
In the message to the Nigerian Stock Exchange last week, he stated: “Diageo has confirmed that it maintains positive outlook for Nigeria in the long term and that it expects the market to continue to grow.
“Nigeria remains a key strategic market for Diageo which remains supportive of Guinness Nigeria, a company with a long and rich history of, its board and management and the action taken by Guinness Nigeria to mitigate the impact of challenging market conditions”.