Guinness Nigeria Plc that just had its 73rd Annual General Meeting (AGM) with shareholders last week published its unaudited first quarter result for 2024, reporting a 5.6% decline in Earnings Per Shares (EPS) to N1.19 which is lower than N1.25 that was recorded same period in 2023.
According to financial statements that were released to the Nigerian Exchange Limited (NGX), the earnings were affected by higher net finance costs which stood at 117.8%.
Just as the brewer was able to grow it revenue by 12.7% against 11.3% in 2023. The growth was supported by (1) pricing adjustments, (2) optimized product mix led by premiumization, and (3) improved distribution method.
Further analysis of the result shows that, net finance cost surged by 117.8% to N4.06 billion in the quarter, mainly due to an 87.8% increase in finance costs amid a 5.6% decline in finance income.
The increase in finance costs was attributed to a rise in accrued interest expenses that was up by 351.8% and foreign exchange losses that stood at 156.6%.
The company recorded. profit before tax of N2.46 billion against N4.04 billion that was recorded in 2023. Following a N1.22 billion tax expense, the company recorded profit after tax of N1.24 billion against N2.75 billion in 2023.
According to management, the Adult Premium Non-Alcoholic Drinks (APNAD) and Ready-to-Serve categories recorded strong revenue growth, while others showed more moderate increases. On a quarter-on-quarter basis, revenue saw a 4.5% increase.
Meanwhile, gross profit margin contracted by 405bps to 30.5%, mainly due to a faster increase in the cost of sale relative to revenue growth. The increase in the cost of sales reflects the inflationary impact of currency devaluation, which price increases could not fully offset.
The volatility of the naira and limited access to forex has continued to affect the brewer’s financial performance, just as witnessed in the prior period.
Despite these challenges, there are expectation of an improved performance in second quarter of 2024 and for the remainder of 2024 financial year due to a stronger revenue base amid cost management measures.
Market watcher at the Fast Moving Consumers Goods (FMCG) space expect the upcoming festive season to boost revenue growth with increased distribution to on trade channels..
