…The brewer reported a pretax loss of N8.25 billion compared to a PBT of N3.19 billion in Q2-23.
…EBITDA margin contracted by 44bps y/y to 13.3% amid higher operating expenses (+15.2% y/y).
THUR, JAN 25 2024-theGBJournal| Guinness Nigeria Plc (GUINNESS) published its unaudited Q2-24 results Thursday, reporting a 26.6% y/y increase in revenue (H1-24: +20.4% y/y), underpinned by higher prices implemented across the brewer’s strategic focus categories, such as Stout, Ready-to-Serve, and Mainstream Spirits, and an improved product mix on premiumization.
On a quarter-on-quarter basis, revenue grew markedly by 39.5%, benefiting from festive-induced demand and increased sales from on-trade channels.
Despite the strong topline growth, the gross profit margin contracted by 319bps y/y to 33.5% (H1-24: -349bps y/y to 32.2%), undermined by a higher cost of sales (+33.0% y/y) print, stemming from persisting macroeconomic challenges such as inflation, currency depreciation and FX market illiquidity.
Accordingly, the EBITDA margin contracted by 44bps y/y to 13.3% amid higher operating expenses (+15.2% y/y).
Further down, net finance cost maintained its uptrend, surging by 385.8% y/y in Q2-24, mainly driven by a 325.9% y/y surge in finance costs.
The increase in finance costs in the period is attributed to a rise in accrued interest expenses (+245.0% y/y) and foreign exchange losses (+247.1% y/y).
Despite the increase in finance costs, the brewer managed to reduce its total borrowings, as the total borrowings decreased slightly by 5.3% YTD to N60.35 billion (2023FY: N63.76 billion).
Overall, the brewer reported a pretax loss of N8.25 billion compared to a PBT of N3.19 billion in Q2-23. Following a tax credit of N420.23 million in the quarter (vs tax expense of N1.92 billion in Q2-23), the loss after tax settled at N7.83 billion (vs PAT of N1.28 billion in Q2-23).
Meanwhile, Guinness also reported a standalone loss per share of N3.57 (vs EPS of N0.58 in Q2-23) translating to a loss per share of N2.39 in H1-24 (H1-23 EPS: N1.84). The negative outturn in earnings was primarily due to a substantial increase in net finance cost (+385.8% y/y).
Analysts at Cordros noted that the brewer faces significant FX volatility risk, prompting a decision to halt the importation of Diageo Premium Spirits.
”Looking forward, we anticipate sustained revenue growth fueled by premiumization and a favourable price/volume mix,” Cordros said.
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