October 25, 2024/CSL Research
Guinness Nigeria Plc reported a 111.4% year-on-year (y/y) increase in Revenue for Q1 2025 – the opening quarter of its new fiscal year 2025 (July–September), rising to ₦125.89billion from ₦59.54billion in Q1 2024. Also, the company’s top-line performance improved q/q, up 59% from ₦79.19billion in Q4 2024. The strong growth in Revenue was largely driven by a price increase of approximately 35% across all product segments. Nigeria remains the biggest market for the company’s products as only 1.3% (₦1.65billion) of its Revenue was generated from exports.
The cost of raw materials has increased significantly over the year, largely due to the company’s reliance on imported materials and recent foreign exchange pressure has worsened the situation. As a result, the Cost of Sales (excluding depreciation) grew at a faster rate than Revenue, rising by 176.6% y/y to ₦109.75billion, up from ₦39.68billion (Q1 2024).The q/q growth was also considerable, with Cost of Sales rising by 104.7% from ₦53.62 billion in Q4 2024.This led to 18.7% y/y decline in Gross Profit to ₦16.13billion from ₦19.85billion (Q1 2024). Consequently, Gross Margin fell by 20ppts to 12.8% from 33.3% in Q1 2024
Operating Expenses (OPEX) rose significantly by 86.9% year-on-year, reaching ₦20.35 billion from ₦10.89 billion. This increase was primarily due to intensified brand awareness and promotional efforts, reflected in a 64.2% year-on-year rise in Marketing & Distribution Expenses to ₦12.77 billion, up from ₦7.8 billion in Q1 2024. As a result, EBITDA for the quarter was negative at ₦4.22 billion, signalling weak cash flow for the business. This contributed to an Operating Loss of ₦6.9 billion, a sharp reversal from the Operating Profit of ₦6.48 billion recorded in Q1 2024.
Cash and Cash Equivalents decreased significantly by 71.35%, falling to ₦13.12billion from ₦45.8billion as of FY 2024. This decline was partly due to the company’s decision to pay down some of its current borrowings, which were reduced by 20.1% to ₦32.1billion from ₦40.13billion as of FY 2024. In a bid to bolster the business cash shortfall in the quarter, a bank overdraft facility of ₦22.3 billion was taken. Despite this, Finance Income grew by 332.7% to ₦2.44billion supported by gain on remeasurement of foreign currency balances (₦2.18billion). However, this positive impact was overshadowed by Finance Cost, which amounted to N11.61 billion, with foreign exchange losses accounting for 73.3% (₦8.5billion). As a result, Net Finance Cost increased to ₦9.17 billion, up from ₦4.06 billion in Q1 2024. Notably, FX pressures were relatively contained during the quarter, with FX Loss recorded at ₦8.5 billion compared to ₦35 billion in Q4 2024.
Overall, the business reported a Loss Before Tax of ₦16.03billion compared with a Profit Before Tax of ₦3.82billion reported in Q1 2024.
We retain a Buy recommendation on Guinness, with a downward adjustment of our price target to ₦76.07/s from ₦93.01/s previously. Current price: ₦65/s
Kindly click on the below link to download the full report.
Guinness Nigeria – Q1 2025 Quick Take.pdf
