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By Chinwendu Obienyi
Owing to persisting macroeconomic challenges such as inflation, currency depreciation and FX market illiquidity, Guinness Nigeria’s net finance cost surged up by 385.8 per cent year-on-year in the second quarter (Q2) of 2024.
This is according to the company’s unaudited Q2 2024 financial statement which was released recently on the Nigerian Exchange Limited (NGX)’s website.
The company’s net finance cost maintained its uptrend, surging by 385.8 per cent year-on-year (y/y) from –N3.45 billion recorded in the same period of 2023 to –N16.77 billion in Q2 2024, mainly driven by a 325.9 per cent y/y surge in finance costs.
The increase in finance costs in the period under review is attributed to a rise in accrued interest expenses (+245.0 per cent y/y) and foreign exchange losses (+247.1 per cent y/y). Despite the increase in finance costs, the brewer managed to reduce its total borrowings, as the total borrowings decreased slightly by 5.3 per cent year-to-date (YTD) to N60.35 billion (2023 FY: N63.76 billion).
Furthermore, its earnings per share (EPS) stood at a loss per share of N3.57 as against N0.58 recorded in Q2 2023, translating to a loss per share of N2.39 in H1 2024 (H1 2023 EPS: N1.84). The negative outturn in earnings was primarily due to a substantial increase in net finance cost (+385.8 per cent y/y). Also, gross profit margin contracted by 319 basis points (bps) y/y to 33.5 per cent (H1 2024: -349bps y/y to 32.2 per cent), undermined by a higher cost of sales (+33.0 per cent y/y) print, stemming from persisting macroeconomic challenges such as inflation, currency depreciation and FX market illiquidity. Accordingly, the EBITDA margin contracted by 44bps y/y to 13.3 per cent amid higher operating expenses (+15.2 per cent y/y).
However, the company noted that it achieved a 26.6 per cent y/y increase in revenue (H1 2024: +20.4 per cent y/y), 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 on premiumization. On a quarter-on-quarter basis, revenue grew markedly by 39.5 per cent, benefiting from festive-induced demand and increased sales from on-trade channels.
