Guinness Ghana sets 30% pre-tax target

The Management of Guinness Ghana Breweries Limited has set a target of boosting its pre-tax profit by 30 per cent in 2011/2012 financial year.

The target is set on the back of recovery in the beverage market and the positive outlook for the Ghanaian economy.

Speaking to journalists on the sidelines of the press launch of the company’s rights offer in Accra yesterday, Rob Pilkington, Finance Director of the company, said the company was very optimistic of improving upon the performance of the company.

“We are seeing a strong recovery in the beer market as volumes are coming back. This presents a very good opportunity for us,” he said.

Guinness Ghana Breweries is seeking to raise GH¢70 million with a renounceable rights beginning yesterday and will end November 14.

The company is offering shareholders the option to buy 1 new share at GH¢1.50 for every 3.5287 shares currently held.

Explaining what the proceeds from the rights offer will be used for the Managing Director of GGBL, Ekwunife Okoli, said the company intends to use the funds raised from the offer to reduce its trade and interest bearing debt and invest in capital expenditure in order to take advantage of the opportunities it sees in Ghana.

He said over the last three years, despite top line growth, GGBL’s bottom line had been adversely impacted by high financing costs and increased input costs.

“A significant depreciation on the currency impacted the company’s foreign denominated payables and cost of goods and the introduction of the ad valorem excise regime that significantly increased excise tax put further pressure on the business,” he said

Mr. Okoli said “the high debt levels of the business taken out to mitigate future currency exposure on the foreign payables have resulted in a high finance cost burden for the business that needs addressing”.

Ghana, he said, had seen robust economic growth over the last five years, presenting business opportunities for the company.

“In order to take advantage of growth opportunities we see ahead, the company is seeking an optimal capital structure to afford the flexibility to grow its business,” he said.

Mr. Okoli said: “reducing the interest burden through the offer will enable GGBL to return to dividend distribution and continue to invest in capacity as we have done recently to maximize market opportunities”.

Source: Ghanaian Times