Guinness Nigeria records 8.5% half year revenue growth



Uba Group

Guinness Nigeria Plc, one of Nigeria’s leading brewers, has reported a half year revenue growth of 8.5 percent year- on- year. Analysts noted that growth in revenue in the review period ended December 31, 2022 was supported by a sustained increase in product prices amid an organic volume decline.

On a quarter-on-quarter basis, revenue grew markedly by 24.1 percent (Q1-23: +11.6% q/q), highlighting the festive-induced demand in the period. Gross profit margin increased by 216bps y/y to 36.7 percent in Q2-23, as revenue growth offset the increase in COGS (+2.9% y/y).

The cost pressures in the period came from higher excise duty expenses (Beer & stouts: +14.3% to N40.00/cl; Spirits: +45.0% to N290.00/cl; Non-alcoholic drinks: N10.00/l), amid the high inflationary environment.

Operating expenses for the period increased by 15.6 percent y/y in Q2-23 (H1- 23: +26.4% y/y), reflecting increased marketing and distribution efforts towards the brewer’s strategic focus brands and categories.

However, other income declined by 73.9 percent y/y, resulting in EBIT and EBITDA margins of 10.1 percent (-136bps) and 13.7 percent (-142bps), respectively.

Elsewhere, a net finance cost of N3.45 billion was recorded in Q2-23 (Q2-22: N60.08 million), comprising finance costs of N4.25 billion (Q2-22: NGN186.76 million) and finance income of N800.72 million (Q2-22: N126.68 million).

The surge in loss on remeasurement of foreign currency balances (H1-23: N2.77 billion vs N248.99 million in H1-22), exchange differences on letters of credit (+367.9%), and foreign currency loans (+433.0%) underpinned the higher finance costs. Compared to Q2-22, PBT was down by 54.6 percent y/y to N3.19 billion (H1-23: – 44.2% y/y). A tax expense of N1.92 billion resulted in a 73.3 percent y/y decline in PAT to N1.28 billion in the period (Q2-22: N4.78 billion).