July 26, 2024/Cordros Report
Guinness Nigeria Plc (GUINNESS) published its 2024FY audited results this afternoon, reporting a loss per share of NGN25.00 (vs NGN8.29 in 2023FY). The negative outturn in earnings resulted from weaker margins and higher net finance charges (+117.8% y/y).
GUINNESS achieved a revenue growth of 30.5% y/y in 2024FY (2023FY: +10.9% y/y) underpinned by higher pricing, product mix optimisation, and innovative product offerings. In addition, Management cited strong growth across the Non-Alcoholic Malt, Ready-to-Serve beverages, and International Premium categories as contributors to this revenue increase. On pricing, our findings indicate that the brewer implemented an average price increase of c. 20.0% during the year. On a quarter-on-quarter basis, revenue grew slightly by 1.9%.
Gross margin contracted by 352bps y/y to 30.5% (2023FY: 34.1%), following the heightened cost of sales (+37.5% y/y) in the review period. The higher cost of sales stemmed from high inflation, utility cost increases, and currency devaluation, leading to a 177.8% y/y surge in raw materials and packaging costs. Consequently, EBIT and EBITDA margins declined to 11.9% (-246bps y/y) and 8.5% (-170bps y/y), respectively, amid a rise in operating expenses (+18.7% y/y).
Further down, net finance costs grew by 117.8% y/y to NGN99.09 billion, as a 126.8% y/y increase in finance costs more than offset the growth in finance income (+179.4% y/y). Key contributors to the higher finance costs include – (i) losses on the remeasurement of foreign currency balances (+316.8% y/y to NGN89.36 billion), (ii) exchange differences on foreign currency intercompany loans (+154.5% y/y to NGN20.49 billion) and (iii) increased interest expenses on loans and borrowings (+289.7% y/y to NGN6.57 billion).
Overall, pre-tax loss in 2024FY increased to NGN73.66 billion (vs 2023FY: NGN22.13 billion). After adjusting for a tax credit of NGN18.91 billion, the net loss printed higher at NGN54.75 billion (vs net loss of NGN18.16 billion in 2023FY).
Management conference call on 30 July 2024 at 02:00 PM: Click here to register.
Comment: The brewer’s performance in the year was impacted by headwinds, such as rising inflation, increased input and operational costs, naira devaluation, and the high interest rate environment. For 2025E, we anticipate the brewer will continue to optimize revenue growth through a strategic, margin-enhancing portfolio play. Additionally, the recent majority stake acquisition by Tolaram Group is expected to significantly benefit the brewer, leveraging the group’s extensive distribution networks and supply chain efficiencies to boost revenue across its product portfolio. However, inflationary pressures, intense market competition, and naira devaluation still pose as downside risks. Our estimates are currently under review.
