July 24, 2025/Cordros Report

Guinness Nigeria Plc (GUINNESS) published their 12M-25 unaudited results today, reporting an earnings per share of NGN7.40 (vs. loss per share of NGN25.00 in 12M-24). The earnings rebound was primarily supported by a mix of strong operating income (+86.5% y/y) and currency stability, which significantly improved financing position, as net finance costs declined by 80.3% y/y.

GUINNESS delivered strong top-line growth in 12M-25, with revenue rising by 65.8% y/y (12M-24: +30.5% y/y), driven largely by significant price adjustments and volume growth across key categories—Non-Alcoholic Malt, Ready-to-Serve beverages, Stout, and Spirits. Based on our findings, the brewer implemented an average price increase of c.39.4% during the period. Export sales also surged by 104.2% y/y, though they accounted for just 1.5% of total revenue. However, on a quarter-on-quarter basis, revenue rose marginally by 0.3%.

Despite strong revenue growth, gross margin declined slightly by 66bps y/y to 29.9% (12M-24: 30.5%) in 12M-25, reflecting the lingering impact of elevated cost pressures in H2-2024, particularly from energy, raw materials, and packaging inputs, which drove a 67.4% y/y increase in cost of sales. Nevertheless, EBIT and EBITDA margins improved to 9.5% (+106bps y/y) and 11.9% (+8bps y/y), respectively, driven by strong gross profit growth, which helped absorb the impact of the 46.2% y/y rise in operating expenses.

On the financing side, net finance costs fell by 80.3% y/y to NGN19.48 billion, supported by a 286.9% y/y surge in finance income and a 14.2% y/y decline in finance costs. The jump in finance income was mainly due to a 334.3% y/y increase in FX remeasurement gains (NGN83.78 billion, accounting for 99.5% of finance income), while the reduction in finance costs was driven by lower exchange losses on letters of credit (-78.2% y/y) and foreign currency loans (-94.8% y/y).

Overall, GUINNESS reported a profit before tax of NGN27.93 billion in 12M-25, a notable recovery from the NGN73.66 billion loss in the prior year. Despite a higher effective tax rate of 42.0% (12M-24: 25.7%), net income improved significantly to NGN16.20 billion, compared to a net loss of NGN54.75 billion in 12M-24.

Management conference call on 29 July 2025 at 02:00 PM: Click here to register.
 
Comment: GUINNESS’s results reflect a strong rebound in earnings, driven by pricing gains, volume recovery, and a deliberate shift toward a more margin-accretive product mix. The sharp rise in the cost of sales reflects earlier macroeconomic pressures in H2-2024; however, cost pressures have since eased, as seen in the recent gross margin improvement in Q3-25 (+967bps y/y to 37.6%) and Q4-25 (+775bps y/y to 37.8%), supported by disinflationary trends and the stability of the naira.  Looking ahead, earnings are expected to strengthen further, bolstered by margin gains, improved efficiency, and the strategic benefits of the Tolaram acquisition— we point out that any resumption of FX instability poses the biggest threat to maintaining current performance. Our estimates are under review.