FRI OCT 25 2024-theGBJournal| Top Nigerian brewer, Guinness Nigeria Plc missed analysts’ Q1-25 expectations on Thursday, reporting a loss per share of N5.55, a stark contrast to the earnings per share of N1.19 recorded in Q1-24.
The sharp decline in earnings was due to elevated cost pressures (+169.6% y/y) and FX loss (+154.6% y/y).
In Q1-25, Guinness saw an impressive revenue growth of 111.4% y/y (Q1-24 : +12.7% y/y), attributed to the strong topline performance to continuous product innovation and higher pricing, as channel checks indicated the brewer implemented price increases of c. 22.5% during the period.
”Moreover, we believe revenue growth was particularly strong in the brewer’s key strategic categories, such as Stout, Ready-to-Serve, and Mainstream Spirits. Export sales also surged by 95.2%, accounting for 1.3% of total revenue in the period,” Cordros Research tells theG&BJournal.
Meanwhile, the gross profit margin contracted significantly by 19.14 ppts y/y to 11.3% (Q1-24: 30.5%), primarily due to a substantial rise in the cost of sales (+169.6% y/y). The higher cost of sales reflects ongoing macroeconomic challenges, including inflation, currency depreciation, and FX market liquidity issues.
Accordingly, the brewer recorded an operating loss of N6.87 billion in the quarter (vs operating profit of N7.87 billion in Q1-24), impacted by the rise in operating expenses (+81.7% y/y).
Further down, net finance costs surged by 126.0% y/y to N9.17 billion in the quarter due to a 151.2% y/y spike in finance costs. The higher finance costs resulted from a substantial rise in losses from the remeasurement of foreign currency balances (+154.6% y/y) alongside a staggering rise in interest expenses (+958.5% y/y).
Overall, the brewer posted a pre-tax loss of N16.03 billion (vs pre-tax profit of N3.82 billion in Q1-24). The loss after tax settled at N12.17 billion in the period after adjusting for an income tax credit of N3.87 billion.
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