July 29, 2024/CSL Research

Guinness Nigeria Plc reported a 30.5% year-on-year increase in revenue for the fiscal year 2024 (July–June), rising to N299.49 billion from N229.44 billion in FY 2023. The company’s top-line performance improved slightly q/q, up 1.9%. The y/y growth in Revenue was largely driven by a price increase of approximately 35% across all product segments implemented in the third quarter.

The cost of raw materials for the business increased significantly over the year, largely due to the company’s reliance on imported materials and the worsening foreign exchange situation. As a result, the Cost of Sales (excluding depreciation) grew at a faster rate than Revenue, rising by 38.9% y/y to N201.99 billion, up from N144.73 billion in FY 2023. However, there was a marginal decline q/q. This led to a decrease in the Gross Margin, which fell to 32.9% from 36.9% in FY 2023. Despite this, Gross Profit increased by 16.2% y/y to N98.41 billion and by 8.9% q/q to N25.57 billion.

Despite a 19.3% y/y increase in Operating Expenses (OPEX), reaching N66.08bn, the company’s EBITDA improved by 10.3% y/y, rising to N32.33bn from N29.32bn. However, the EBITDA margin slightly decreased by 2 percentage points to 10.8%. Meanwhile, Other Income declined by 10% y/y to N3.18bn. Nevertheless, the company saw an 8.8% y/y increase in Earnings Before Interest and Tax (EBIT), which grew to N25.42 billion.

Cash and Cash Equivalents decreased significantly by 50.28%, falling to N45.8bn from N92.12bn in FY 2023. This decline was primarily due to the company’s decision to pay down some of its current borrowings, which were reduced by 37% to N40.13bn from N63.7bn in the previous year. Despite this, Finance Income saw a substantial increase of 179%, rising to N21.76bn from N7.79bn in FY 2023, mainly due to remeasurement gains on foreign currency balances. However, this positive impact was overshadowed by soaring Finance Costs, which amounted to N120.85 billion, with foreign exchange losses accounting for 92.9% of these costs. As a result, Net Finance Cost rose to N99.09bn, up from N45.49bn in FY 2023.

Overall, the business reported a Loss Before Tax of N73.66bn, from the Loss Before Tax of N22.13bn in FY 2023

We had a Buy recommendation on Guinness with a price target of N93.01/s. Our price target and recommendation are being reviewed. Current price; N63.5/s

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​​​​​Guinness Nigeria – FY 2024 Quick Take.pdf​​​​​