January 26, 2024/CSL Research
Guinness Nigeria Plc released its Q2 2024 (Oct-Dec) unaudited numbers. The renowned foreign extra stout brewer recorded double-digit Revenue growth of 26.6% y/y to N83.06bn (Q2 2024) from N65.6bn (Q2 2023). Likewise on a q/q basis, Revenue grew by 39.5% to N83.06bn from N59.54bn recorded in Q1 2024. The Q2 2024 impressive topline performance aligns with our expectation that revenue will grow significantly due to holiday season demand.
The Cost of Sales (ex-depreciation) grew faster than Revenue, up 32.5% y/y to N53.32bn in Q2 2024 from N40.25bn in Q2 2023 and up 35% q/q. This resulted in a decrease in Gross Margin to 35.8% in Q2 2024 from 38.7% in Q2 2023. Gross Profit however grew 17.3% y/y to N29.74bn in Q3 2024 from N25.36bn in Q2 2023 and 48.3% q/q.
Operating Expenses (ex-depreciation) rose 13.9% y/y and 80.8% q/q. As Administrative Expenses (ex-depreciation) decreased by 7.8% y/y to N4.6bn in Q2 2024 from N4.99bn in Q2 2023, Marketing and Distribution Expenses (ex-depreciation) increased by 22.9% y/y to N14.9bn in Q2 2024 from N12.14bn in Q2 2023. Regardless, EBITDA improved, up 24.3% y/y to N10.22bn (Q2 2024) from N8.22bn (Q2 2023), although EBITDA margin was marginally down by 0.2pts to 12.3%.
Depreciation & Amortisation rose by 50.6% y/y to N2.81bn in Q2 2024 from Q2 2023’s N1.87bn, reflecting additional capital expenditure (CAPEX). Other Income increased y/y to N1.12bn in Q2 2024 from N294m in Q2 2023. The 16.6% y/y growth in Operating Profit to N7.41bn from N6.35bn in Q2 2023 resulted in a 28.3% y/y increase in Earnings Before Interest and Tax (EBIT) to N8.52bn in Q2 2024 from N6.65bn Q2 2023.
Business liquidity significantly improved, with Cash and Cash Equivalents surging by 74% to N113.83bn as of December 2023 compared with N65.42bn in the corresponding period. Despite a substantial 211.1% y/y increase in Finance Income to N2.49bn in Q2 2024 from N801m in Q2 2023, soaring Finance Costs of N19.26bn, with FX losses accounting for 89.7%, overshadowed the positive impact. Consequently, Net Finance Loss amounted to N16.77bn, significantly higher than N3.45 billion in Q2 2023.
In summary, the business reported a Net Loss of N7.83bn in Q2 2024 compared with a profit of N1.28bn in the corresponding quarter of 2023 and N2.6bn in Q1 2024.
We retain a Buy recommendation on Guinness with a price target of N95.41/s. Current Price: N70.75/s.
Kindly click on the below link to download the full report.
Guinness Nigeria – Q2 2024 Quick Take.pdf
