…Overall, GUINNESS recorded an adj. profit before tax of N2.46 billion in Q1-24 (vs PBT of N4.04 billion in Q1-23).
…The volatility of the naira and limited access to forex has continued to affect the brewer’s financial performance
THUR, OCT 26 2023-theGBJournal|Guinness Nigeria Plc (GUINNESS) published its unaudited Q1-24 results after market close on Wednesday, reporting a 5.6% y/y decline in EPS to N1.19 (Q1-23: N1.25) undermined by higher net finance costs (+117.8% y/y).
Adjusting for the export expansion grant (N1.35 billion), the company reported an EPS of N0.57 (-54.8% y/y).
Revenue grew by 12.7% y/y in Q1-24 (Q1-23: +11.3% y/y), supported by (1) pricing adjustments, (2) optimized product mix led by premiumization, and (3) improved distribution method.
According to management, the Adult Premium Non-Alcoholic Drinks (APNAD) and Ready-to-Serve categories recorded strong revenue growth, while others showed more moderate increases. On a quarter-on-quarter basis, revenue saw a 4.5% increase.
Meanwhile, gross profit margin contracted by 405bps to 30.5% (Q1-23: +34.5%), mainly due to a faster increase in the cost of sales (+19.6% y/y) relative to revenue growth. The increase in the cost of sales reflects the inflationary impact of currency devaluation, which price increases could not fully offset.
However, adj. EBITDA (+10.7% y/y) and adj. EBIT (+10.4% y/y) printed higher due to the decline (-10.3% y/y) in operating expenses indicative of cost-saving initiatives and operational efficiencies.
Meanwhile, adj. EBITDA (-27bps) and adj. EBIT (-22bps) margins declined to 15.1% and 11.0%, respectively.
Further down, net finance cost surged by 117.8% y/y to N4.06 billion in the quarter, mainly due to an 87.8% y/y increase in finance costs amid a 5.6% y/y decline in finance income.
The increase in finance costs was attributed to a rise in accrued interest expenses (+351.8% y/y) and foreign exchange losses (+156.6% y/y).
Overall, GUINNESS recorded an adj. profit before tax of N2.46 billion in Q1-24 (vs PBT of N4.04 billion in Q1-23). Following an N1.22 billion tax expense, the company recorded an adj. profit after tax of N1.24 billion (vs PAT of N2.75 billion in Q1-23).
The volatility of the naira and limited access to forex has continued to affect the brewer’s financial performance, just as witnessed in the prior period.
Despite these challenges, analysts say they expect an improved performance in Q2 and for the remainder of 2024E due to a stronger revenue base amid cost management measures.
We also expect the upcoming festive season to boost revenue growth with increased distribution to on-trade channels.
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