Nigeria: Guinness Nigeria’s market value drops by 10% after selloffs

Guinness Nigeria Plc’s market value has dropped by 10% to N100.538 billion on March 7 in the stock market as shareholders took another round of exits following the brewer’s unimpressive earnings performance, MarketForces Africa reported.

The company share price moved against the trend in the stock market trend as investors were hurting after the company posted a loss in the second quarter of its financial year 2024 earnings scorecard.

Its share price declined to N45.9 on Thursday after trading steadied at N51 over the last seven trading sessions on the Nigerian Exchange. Guinness Nigeria’s earnings for the second quarter of 2024 was underwhelming as a result of damage caused by negative exchange rate movement.

Though the company posted a loss, liquidity significantly improved, with Cash and Cash Equivalents surging by 74% to N113.83 billion as of December 2023 compared with N65.42 billion in the corresponding period.

The brewer’s financial showed that finance income grew by 211.1% year on year to N2.49 billion at the end of the second quarter of the financial year 2024 from N801 million in Q2-2023.

However, the growth was eclipsed by a sharp increase in the company’s finance costs to N19.26 billion of which FX losses accounted for 89.7% of the total sum. Guinness Nigeria Plc closed the period with a net finance loss totalling N16.77 billion, significantly higher than N3.45 billion in Q2 2023.

At the end of the second quarter of the financial year 2024, Guinness Nigeria posted N7.83 billion net loss versus N1.28 billion post-tax profit in the corresponding quarter of 2023.

The brewer recorded a loss per share of N3.57 in Q2 as against earnings per share (EPS) of N0.58 in Q2-2023. This translated to a loss per share of N2.39 in H1-2024 from EPS of N1.84 in the corresponding period.

Revenue surged by 20.4% in the first half of 2024, 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.

Despite the strong top-line growth, the gross profit margin contracted by 349 basis points year on year to 32.2% in the first half results for 2024 financial year as a result of higher costs of sales.

The company’s cost of sales accelerated by 33.0% year on year, stemming from persisting macroeconomic challenges such as inflation, currency depreciation and FX market illiquidity.

08 March, 2024