January 23, 2025/Cordros Report
Guinness Nigeria Plc (GUINNESS) published its Q2-25 unaudited results this afternoon (23 January), reporting a standalone EPS of NGN5.42 (vs loss per share of NGN3.57 in Q2-24), bringing H1-25 loss per share to NGN0.14 (H1-24 loss per share: NGN2.39). The return to profitability during the quarter was largely driven by a 61.0% y/y growth in revenue and a net finance income of NGN2.02 billion (vs net finance cost of NGN16.77 billion in Q2-24).
GUINNESS’ revenue grew by 61.0% y/y in Q2-25 (H1-25: +82.1% y/y), driven by (1) increased sales in premium product categories, including Non-Alcoholic Malt, Ready-to-Serve beverages, and International Premium Spirits; (2) an expanded retail distribution network; and (3) strategic price adjustments. On a quarter-on-quarter basis, revenue rose by 6.2%, supported by the festive season-induced demand.
Gross profit margin steadied at 33.5% in the quarter (H1-25: -949bps y/y to 22.7%), as the 61.0% y/y increase in cost of sales matched the growth in revenue. We attribute the increase in costs to the highly inflationary environment (December 2024 Food CPI: 39.84%) and naira depreciation. However, EBITDA margin improved by 240bps y/y to 15.7% in Q2-25 (H1-25: -852bps y/y to 6.5%) despite a 31.0% y/y increase in operating expenses.
Further down, the company reported a reversal in its net finance position, reporting a net finance income of NGN2.02 billion in Q2-25 (vs net finance cost of NGN16.77 billion in Q2-24). This positive outcome was driven by a 23.7x surge in finance income to NGN61.53 billion, largely attributable to FX-related gains of NGN61.47 billion, which outpaced finance costs of NGN59.51 billion (+208.9% y/y). However, for H1-25, net finance costs declined by 65.7% y/y to NGN7.15 billion.
Overall, the brewer reported a pre-tax profit of NGN20.14 billion in Q2-25, marking a turnaround from the pre-tax loss of NGN8.25 billion recorded in Q2-24. After accounting for a tax expense of NGN8.28 billion during the quarter, profit after tax stood at NGN11.86 billion (vs loss after tax of NGN7.83 billion in Q2-24).
Comment: We like GUINNESS’ recovery in Q2-25, highlighting the strong revenue growth and improvement in profitability margins. Looking ahead, we expect this momentum to be sustained, supported by improving operational efficiencies as the synergies from Tolaram’s acquisition gradually materialise. However, we remain cautious about persistent cost pressures, which could pose challenges to profitability growth. Our estimates are under review.
