Diageo Nigeria unable to refinance loans, trim costs over Dollar shortage: Report

*Guinness Nigeria’s outstanding debt rose 16% to N23.2 billion ($60 million) as of June 2020

*Forex is a big concern for us; company to prioritise Stout, Spirit and Malt brands in 2020 to grow business, cushion impact of COVID-19 on operations, says Finance and Strategy Director

Isola Moses | ConsumerConnect

The Nigeria unit of Diageo Plc has said that it is struggling to refinance a foreign-currency loan and trim costs, following a shortage of Dollars in the country regarded as Africa’s largest economy.

Mr. Stanley Njoroge, Finance and Strategy Director of Guinness Nigeria Plc, on a recent investor call in Lagos, disclosed that the company is weighing options to manage a $23 million debt as a lack of liquidity in the local foreign-exchange market has made it difficult to refinance, reports Bloomberg.

Njoroge said: “We will want to refinance it but there is no foreign currency in the market at the moment.”

Report indicates although the brewer of Guinness Stout is looking to roll over the loan which matures in May 2021, it is yet to decide whether to keep it as a Dollar debt or convert to a local-currency loan.

Nigeria’s second largest brewer’s outstanding debt rose 16% to N23.2 billion ($60 million) as of June 2020, compared with a year ago, while finance costs rose 74% to N4.5 billion.

It was gathered that scores of Nigerian companies are struggling to access the greenback after a slump in oil prices cut export earnings, thereby putting pressure on the Central Bank of Nigeria’s capacity to meet Dollar obligations to investors and businesses. Njoroge said.

Guinness Nigeria’s Finance and Strategy Director stated that “foreign exchange is a big concern for us.”

Guinness Nigeria made a net loss of N12.6 billion for the full year through June, compared with a profit of N5.5 billion a year ago, according to its filing on the Nigerian Stock Exchange (NSE) Friday, August 28, 2020.

Revenue also dropped by 21% to N104.4 billion, report said.

Njoroge said that the company, in the meantime, would prioritise Stout, Spirit and Malt brands in 2020 and focus less on Lager as it aims to grow the business and cushion the impact of the disruptive COVID-19 pandemic its operations.

He added: “We don’t have the right price in lager.”