Event

Despite a commendable revenue and operating profit year-on-year growth, bottom-line was adversely impacted as currency depreciation took center stage.

Capitalising on a sustained pricing strategy, coupled with an optimised product mix driven by premiumtisation, Guinness Nigeria Plc (‘the Group’) achieved a commendable 27% revenue growth to N83.06 billion in Q2 2024 (Q2 2023: N65.60 billion).

The spotlight gravitated towards FX losses, which negatively impacted the Group’s performance in the quarter. The currency depreciation precipitated a staggering 285% year-on-year FX losses. Additionally, with finance cost soaring to N1.29 billion, net finance cost experienced a significant 193% deterioration.

The FX losses overshadowed the operating profit achieved during the quarter, thereby plunging the Group into a net loss of N7.83 billion in Q2 2024, from a net profit position of N1.28 billion in Q2 2023.

Outlook

The Group’s sustained operating profit underscores its resilience in navigating the evolving market dynamics. However. in view of the quarter’s financial performance falling below our expectation, we adjusted our fair value to N65.91 (previously: N68.17).

Notably, the stock price has declined by 28% since the release of the Q2 2024 financial result. With the stock price trading at N51.00 (as of the date the report was written), it presents a good entry point as it offers a 29% total return (exclusive of dividend) to our fair value. Hence, we now recommend a BUY for the stock (previously: HOLD).

Please follow the link “Guinness Nigeria Plc Q2 2024 – FX Losses Erodes Group’s Operating Profit” to view the whole report.

Thank you.