FSDH Initial Reaction: Guinness Nigeria FY23 results 
Kindly click here to download the report.

July 28, 2023/FSDH

Key Performance Highlights:

• Guinness Nigeria, a leading beverage and alcohol company, recorded mixed operating performance in FY22, with a handsome 10.9% YoY revenue growth but a slight 2.3% YoY fall in operating profit. The Company recorded 10.9% YoY revenue growth to N229.4 billion in FY23, despite the challenging macro environment with rising inflation and increasing operating costs. Solid top-line performance has benefitted mainly from price increases across all brands and a favourable brand mix. Revenue grew across all key categories driven by the Company’s strategic focus brands, Malta Guinness and Guinness, and strong growth in local and imported spirits and the ready-to-drink category.
• Gross profit increased by 7.5% YoY to N78.1 billion in FY23. As the cost of sales grew ahead of the revenue, Guinness saw a margin contraction of 108 bps YoY to 34.1% in FY23. The cost of sales rose 12.8% YoY to N151.3 billion in FY23 compared to N134.2 billion in FY22. The increased cost of sales is mainly due to inflationary pressure, sales volume growth, currency devaluation impacting the cost of imported materials, air-freight cost increase, and a shift towards more expensive can products.
• The Company’s other income vaulted 28.9% YoY to N3.5 billion in FY23, primarily driven by an N1.5 billion gain on the disposal of property, plant, and equipment and an N1.6 billion gain from a promissory note from an Export Expansion Grant. Marketing and distribution expenses jumped 10% YoY to N41.2 billion in FY23. Advertising and promotion expenses increased 23.8% YoY, in line with the Company’s strategy to invest and support its growth priorities and the recovery of the on-trade following the easing of Covid-19 restrictions. The Company also recorded a 23.8% YoY increase in administrative expenses to N16.9 billion in FY23. Consequently, the operating profit came in at N23.2 billion, with a marginal 2.3% YoY decrease, versus an operating profit of N23.9 billion in FY22. The operating margin was down 138 bps YoY to 10.2% in FY23, compared to 11.6% in FY22.
• The Company’s finance income shot up 309.1% YoY to N7.8 billion in FY23, driven by an increase in the interest income from financial assets to N2.2 billion, supported by an increase in gain on remeasurement of foreign currency balances to N5.5 billion (FY22: N879 million). However, the Company’s finance costs increased to N53.3 billion in FY23 versus N2.1 billion in FY22 due to a loss in the remeasurement of foreign currency balances. Guinness Nigeria reported an income tax credit of 3.9 billion, mainly due to increased non-deductible expenses versus the N1.1 billion tax charge in FY22. Consequently, the Company reported a net loss of N18.2 billion in FY23 versus a profit of N15.7 billion in FY22. The Company reported a loss per share of N8.29 versus an earnings per share of N7.15 in the prior year.

Market Reaction: The investor reaction to the FY23 results was tepid as the stock declined 10.0% to close at N66.60 versus a 0.65% fall for the All-Share Index (28/7).

Guinness Nigeria Earnings Highlights FY23

Source: Company Financials, FSDH