Guinness Nigeria Posts N5.2bn Loss as FX Reform Damages Earnings

Guinness Nigeria Plc has posted N5.23 billion as a loss after tax due to a strong spike in net finance costs, details from its recent earnings scorecard submitted on the Nigerian Exchange revealed. The company is currently valued at N154 billion in the stock market, according to data from the local bourse.

For Guinness Nigeria Plc, 2023 was a tough year as the brewer was confronted with multiple pressures from the cracked operational environment spooked by higher inflation and the naira devaluation. Analysts said losses relating to its forex exposures damaged the company’s performance as top Breweries challenger is now required to meet its balance sheet foreign currency liabilities at higher exchange rates.

Details from its result showed that Guinness Nigeria Plc registered a substantial increase in net finance cost, up by 385.8% year on year due to forex exposure.  The Brewer’s loss per share of N2.39 in the first half of the financial year 2024, which was a negative switch from earnings per share of N1.84.

Its revenue grew by 20.4% to about N143 billion due to higher prices implemented across the brewer’s strategic focus categories, such as Stout, Ready-to-Serve, and Mainstream Spirits, and an improved product mix. Despite the strong top-line growth, the gross profit margin contracted by 319 basis points year on year to 33.5% from 35.7%% in the comparable period. 

The company’s profit margin was undermined by a higher cost of sales, stemming from persisting macroeconomic challenges such as inflation, currency depreciation and FX market illiquidity. Costs of sales increased by 26.9% in the first half of 2024 financial year, from N76.16 billion to N96.66 billion due to inflationary conditions in Nigeria. 

Guinness Nigeria’s net finance costs accelerated by 292% year on year to N20.83 billion from N5.31 billion in the comparable period in 2023. Overall, the brewer reported a pretax loss of N4.42 billion compared to a PBT of N7.23 billion in the first half of the financial year 2024.

Despite its tax credit advantage, earnings plunged into negative as pressure weighed on its bottom line.

Post-tax loss for the period settled at N5.23 billion from N4.02 billion declared as profit in the comparable period last year. While the brewer demonstrated strength in revenue growth in the period, the substantial increase in finance costs, majorly due to FX loss, impacted earnings in the period, analysts said. Naira Steadies as Banks Issue Update on FX Purchase