Manufacturing sector will soon experience
new dawn, says Engr. Ralph Alabi, Chairman, Guinness Nigeria
Plc
By OMODELE ADIGUN
Monday, December 31, 2007
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•Alabi
Photo: Sun News Publishing |
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As if to console his colleagues in the real sector of the
economy that there is light at the end of the tunnel, Engr.Ralph
Alabi, the Chairman of Guinness Nigeria Plc, looked beyond
the parlous state of the sector and sighed: “With the
government taking determined steps to address the lapses of
the past and the challenges of the present and the future,
we expect that the manufacturing sector in Nigeria, and the
economy will soon experience a new dawn.”
His optimism that things would soon start to bubble stems
from what he considers the hard facts on the ground, at least,
within the last few months of the present administration.
He observed that “the government continued to focus
on sustaining a stable macro-economic environment through
various policy initiatives. This has led to stability in the
rate of inflation and the exchange rate, interest rate also
declined largely as a result of the introduction of the Monetary
Policy Rate (MPR) to replace the Minimum Rediscount Rate (MRR).
These positive developments continued throughout the year
in spite of the increased liquidity in the economy attributed
mainly to increased spending to fund the expenses of the last
general elections and an increase in foreign direct investment
(FDI) into Nigeria especially from portfolio investors attracted
by the impressive returns from the Nigerian Capital Market
and rising crude oil prices.
The government has declared its intention to retain only the
laudable policies of the immediate past administration, while
addressing the challenges with implementation. This is reflected
in the suspension of the Value Added Tax (VAT), reversal of
the increase in the price of fuel and sale of both the Kaduna
and Port Harcourt refineries by its predecessor as well as
the recently halted waivers granted some individuals and corporate
organizations.
In addition, the recapitalisation exercise in the insurance
sector peaked in February resulting in the inflow of approximately
N170 billion into the sector. The banking sector also embarked
on a second round of consolidation exercise mainly through
public offerings and mergers.
So, with the government taking determined steps to address
the lapses of the past and the challenges of the present and
the future, we expect that the manufacturing sector in Nigeria,
and the economy will soon experience a new dawn.
On what is brewing in the beer market, the Guinness boss said
that things are really looking up there. Hear him: “The
beer market grew by 14.3 per cent in the 2007 financial year
when compared to the same period in 2006. In 2008, the market
is forecast to increase by about 7.9 per cent.
Now coming home, it is a thing of utmost joy for Alabi to
preside over a company that is growing by leaps and bonds
every day.
For instance, Guinness grew its turnover by 16 per cent to
N62.66 billion over the last year’s figure, while profit
before tax was N14.89 billion, a growth of 30 per cent from
the N11.44 billion recorded in 2006. The company’s earnings
per share was put at 784 kobo, an improvement of 24 per cent
over the previous year’s performance. He attributed
the growth to some excellent activities in the early part
of the company’s fiscal year. These included in-bar
promotions in 6,000 outlets throughout the country between
August and October 2006 and a National Consumer Promotion,
popular called “Udeme” by its admirers, that ran
between December 2006 and the first week of March 2007.
He explained: “Brand Guinness recorded impressive equity
gains created by an excellent launch of the Guinness ‘Greatness’
campaign in January 2007 with the tagline “There’s
a drop of greatness in every man.” The name “Udeme”
from the ‘Greatness’ television commercial has
now become a by-word in every home in Nigeria and beyond.
With the net sales of Guinness stout in the year going up
by 18 per cent, Nigeria has overtaken Ireland, for the first
time, as the second biggest market in the world for Guinness
stout.” Alabi explains in this piece how Guinness Nigeria
was able to outshine others, its giant stride to greatness
and what the government is expected to do to make the nation’s
manufacturers smile.
The business environment
Nigeria’s economic performance for 2007 has been mixed.
Although there is no official data yet on the country’s
growth rate, the sub-optimal oil production due to the Niger
Delta militants’ activities and constraining impact
of epileptic power supply on manufacturing and industrial
output have dampened growth in the period.
Overall , the economy appears set to end the year on a strong
note at between six to eight per cent growth rate but below
the reviewed GDP growth forecast of 13 per cent per annum
as announced by the president at the Ministers’ Retreat.
We look forward to the effective implementation of the 2008
budget as the fulcrum for economic growth in the near term.
The government continued to focus on sustaining a stable macro
economic environment through various policy initiatives. This
has led to stability in the rate of inflation and the exchange
rate, interest rate also declined largely as a result of the
introduction of the Monetary Policy Rate (MPR) to replace
the Minimum Rediscount Rate (MRR).
These positive developments continued throughout the year
in spite of the increased liquidity in the economy attributed
mainly to increased spending to fund the expenses of the last
general elections, an increase in foreign direct investment
(FDI) into Nigeria especially from portfolio investors attracted
by the impressive returns from the Nigerian Capital Market
and rising crude oil prices.
The improvements in the economy continued to attract international
attention as two leading global rating agencies – Standard
& Poor’s and Fitch – awarded a BB rating to
Nigeria for the second time in two years.
In addition, the recapitalisation exercise in the insurance
sector peaked in February resulting in the inflow of approximately
N170 billion into the sector. The banking sector also embarked
on a second round of consolidation exercise mainly through
public offerings and mergers.
These developments, though positive for the economy overall,
have meant that Guinness Nigeria has had to be innovative
to compete effectively for consumer disposable income. The
general elections took place and were relatively trouble free.
There were short-term disruptions in operations owing to the
additional days of public holiday and restrictions on movement.
Our company held on valiantly in spite of the challenges and
even the disruptions caused by six-day holiday in April 2007
alone, three of them unplanned, could not derail the momentum
which started early in the financial year. The company was
thus able to make some truly groundbreaking achievements in
the year.
At the political front, the government of President Yar’Adua
is beginning to entrench itself and consolidate its power
base. The government has declared its intentions to retain
only the laudable policies of the immediate past administration,
while addressing the challenges with implementation. This
is reflected in the suspension of the Value Added Tax (VAT),
reversal of the increase in the price of fuel and sale of
both the Kaduna and Port Harcourt refineries by its predecessor
as well as the recently halted waivers granted some individuals
and corporate organizations.
With government taking determined steps to address the lapses
of the past and the challenges of the present and the future,
we expect that the manufacturing sector in Nigeria, and the
economy will soon experience a new dawn.
The brewing industry
The first quarter of the year has been very eventful. The
beer market volume grew by 14.3 per cent in the 2007 financial
year compared to same period in 2006. In 2008, the market
is forecast to increase by about 7.9 per cent.
The company has extended the successful Guinness Greatness
campaign into its next phase with new materials emphasizing
the heritage of Guinness and leveraging a compelling pay-off
line – Millions of Nigerians choose Greatness. The popular
game of football is being used as a key platform to connect
with our consumers. We have secured main sponsorship rights
for the English Premier League on all satellite and terrestrial
channels thus ensuring that all consumers have wide access
to the most popular league in the world, courtesy of Guinness.
I am sure that you have all observed the commencement of our
exciting National Consumer Promotion, a unique, football-themed
promotion which leverages on our sponsorship of the National
Football team – the Super Eagles.
Harp lager has been given a total label overhaul, resulting
in a new look that gives it a premium standout from all the
other lagers in the market. This has been complemented by
the launch of Harp cans, thereby creating a milestone for
the brand as the first Lager produced indigenously in cans.
A highly engaging campaign has also been developed for Harp
in answer to the need to create clear differentiation for
the brand and thereby drive its growth opportunities. This
platform – The Real Beer for Real Men- has commenced
with the use of three well-known celebrities, DJ Jimmy Jatt,
Katung of Big Brother Nigeria fame and Dennis Elliot, as brand
icons representing “Realness.”
New communications on all aspects of media have also been
launched for Malta Guinness, Satzenbrau Pilsner lager, Gordon’s
Spark and Smirnoff Ice supported by new packaging for some
of the brands.
These efforts have not gone unnoticed in the very challenging
competitive market in which we operate and I am quite confident
that when we take stock of our performance at the next Annual
General Meeting (AGM), the endorsement of the initiatives
by our appreciative consumers will be evident.
The beer market experienced some growth especially in the
first half of 2007 fuelled largely by improved disposable
income arising from the elections-related spending. The regional
brewers up-weighted their activities during the year with
new partnerships and alignments with international brewing
companies. These have led to the introduction of some international
brands supported by new advertising campaigns which have heightened
competition in the industry.
The volume growth for the company has been driven by some
excellent activities in the first half of the financial year,
including in-bar promotions in 6,000 outlets throughout the
country between August and October 2006 and a National Consumer
Promotion that ran between December 2006 and the first week
of March 2007. Brand Guinness recorded impressive equity gains
created by an excellent launch of the Guinness ‘Greatness’
campaign in January 2007 with the tagline “There’s
a drop of greatness in every man.” The name “Udeme”
from the ‘Greatness’ television commercial has
now become a by-word in every home in Nigeria and beyond.
Above the line activities built on the Guinness Greatness
communication on all elements of the media with the use of
new iconic visuals on billboards. These were complemented
by the “Friend or Foe” reality show, which was
concluded in March 2007. Thereafter, a new television series
“The Bachelors” ran on five key stations across
Nigeria, serving as a good brand sponsorship vehicle for promoting
the contemporariness of the brand.
Below the line activities on Guinness Extra Smooth continued
in the last quarter of our financial year with a four-day
“Smooth Festival” in Jos which grew greater consumer
understanding of the brand.
The company also hosted a number of brand sponsorship activities
including the Ogbe Hard Court Tennis tournament, and the “Nite
of a Thousand Laughs” shows on New Year’s day
and Easter day in Port Harcourt and Lagos respectively.
Increased above the line presence was achieved for Gordon’s
Spark during the year, with new style ‘A’ line
billboards across Lagos, Port Harcourt, Enugu, Ibadan and
Jos, in conjunction with the “Taste of Style”
radio campaign across the same cities.
Harp Lager participated in the Family Buy Scheme in the second
half of the year, resulting in increased awareness and excitement
around the brand at the trade level. Below the line activities
towards the end of the year focused on significant distributor,
wholesales and in-bar promotions, to drive volumes through
the supply chain. A new communication campaign to leverage
the key distinguishing functional and emotional attributes
of Harp lager was also launched just before the end of the
2007 financial Year.
These excellent promotional activities have not gone unnoticed
by the consumer. With the net sales of Guinness stout in the
year going up by 18 per cent, Nigeria has overtaken Ireland
,for the first time, as the second biggest market in the world
for Guinness stout.
Performance
It is a matter of satisfaction for me to see yet another year
of robust growth and strong performance for the company. Turnover
increased by 16 per cent over last year to N62.66 billion,
profit before tax was N14.89 billion, a growth of 30 per cent
from the N11.44 billion recorded last year and earnings per
share was 784 kobo, an improvement of 24 per cent over the
previous year’s performance.
All our shareholders can draw even greater satisfaction from
the fact that these financial results rest on a strong foundation
of trust earned by our company’s diverse brands and
products and the enduring relationships formed with millions
of consumers, customers and suppliers in Nigeria over several
years. It is on this bedrock of trust, competence, innovation
and partnerships that we have built our aspiration to be the
leader in the beverage business in Nigeria.
The challenging operational environment notwithstanding, the
company returned an improved financial and operational performance
in the year. Our continuing focus on costs and effective cash
management led to an increase in adjusted earnings per share
by 44 per cent to 725 kobo.
I am pleased to state that the turnover of the company rose
to N62.26 billion up 16 per cent over the N53.65 billion recorded
in 2006. The profit before tax stood at N14.89 billion, an
increase of 30 per cent over the N11.44 billion in the previous
year.
As a result of this successful performance, the board is recommending
a dividend of 450 kobo per share, up by 12.5 per cent on the
dividend declared per share in 2006.
The financial performance reflected the effectiveness of our
strategy.
Corporate social responsibilities
Our company’s contributions to societal needs in the
focus area of provision of potable water for several hundred
thousands of people in the 2007 financial year and the positive
impact of the projects on various communities across Nigeria
have already been well-highlighted in the annual report. Just
as it did with potable water, Guinness Nigeria has continued
its social investments in the area of health, education, sports,
art and culture throughout Nigeria. Our efforts in this area
have also not gone unnoticed as the company received several
laurels and third party endorsements for the laudable activities.
It is hoped that the company’s example will serve to
encourage others in the corporate sector to contribute more
readily with impactful Corporate Social Responsibility initiatives.
Our company is, indeed, privileged to be able to make a difference,
and be recognized for the contribution it makes.
Since inception, Guinness Nigeria has committed itself to
conducting business with a strong bias for the enrichment
of the quality of life of its employees, customers and the
community at large.
We also take seriously our obligations to all our stakeholders
as we believe that excellence in corporate responsibility
delivers competitive advantage and long-term success. Apart
from its continued support for the three Guinness Eye Hospitals
in Lagos, Onitsha and Kaduna. Guinness Nigeria also supported
several new life-enriching programmes to benefit citizens
in its host communities and beyond. Among our major community
investments in the 2007 financial year are the Water of Life
projects under which the company provided improved water for
an additional 320 thousand people throughout Nigeria in Lagos,
Rivers, Imo, Nasarawa and Niger states.
Guinness Nigeria Plc believes in the highest standards of
corporate governance and works hard to maintain transparency,
integrity and accountability in all its operations. We lay
special emphasis on providing efficient and courteous service
to our over 75 thousand shareholders all over Nigeria and
abroad through a network of offices maintained by our registrars.
Details of these offices are contained on the shareholders’
information section of the unclaimed dividend list.
Our people
Guinness Nigeria is proud of its more than 1,000 employees
who have been toiling consistently to garner a better performance
every year. We are aware of the competencies required for
critical and frontline positions in our business and have
determined that this would now form a basis for people recruitment,
development and placement decisions in the company. They would
also help individuals to improve on their capabilities and
thereby, successfully achieve business goals.
To realize our ambition to become the clear industry leader,
will require the commitment and dedication of our valued employees.
I have no doubt whatsoever about their capability to deliver
the goals because of their hard work and diligence.
We trust that we can continue to count on their invaluable
support as we march on in our journey to become the clear
market leader in the industry.
The Board of Directors has been very impressed by the dedication
and talent of our employees. It is because of these qualities
that the impressive results we have returned in the 2007 trading
year have been attained. I am also appreciative of the guidance
and support of our Board of Directors. The company is privileged
to be served by people of such extra-ordinary passion and
commitment, and I am fortunate to be working with them. We
also wish to appreciate the support of government at all levels
in Nigeria for creating an enabling environment to enable
us grow our business and create value for all our stakeholders.
Our future
With the successful conclusion of the 2007 general elections
and the taking over of the reins of powers by new public officers
at all levels in a relatively peaceful manner, we look forward
with hope to continued stability in the economy and improvements
in several areas of human development indices especially power.
It is heart-warming to note that the new government at the
national level has set for itself an annual economic growth
rate target of 13 per cent with a stable and predictable macro-economic
environment.
The Federal Government’s stated commitment to develop
major commercial and industrial centers and mega cities such
as Lagos, Port Harcourt, Ibadan, Kaduna Kano and Enugu based
on their potentialities as catalysts for enhanced industrial
development and to ensure budget discipline as well as adherence
to the rule of law will further provide the impetus required
for economic development and growth.
The company will, of course, continue to watch as the policies
unfold and take appropriate steps to ensure that we are well-positioned
to benefit from the projected growth and protect our market
share amid increased competitive activities.
After an exceptionally good year, we are well aware of the
challenges ahead of us and we are fully committed to face
the challenges squarely.
I am appreciative of our relationships and liaisons with governments
in our many operating hubs throughout Nigeria. We look forward
to profitably expand our operations in our current markets
and explore new opportunities where we see the potentiality
for added value.The ongoing enthusiasm, dedication and commitment
of our staff have been key components in our success. I am
confident that our strategy will continue to deliver good
results, with our strong management team ensuring excellence
in execution.
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