Saturday, January 17, 2026
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Business

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ICT

Konga Partners Verve to Delight Customers with Free Shopping Vouchers

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Telecom Infrastructure Critical to Successful 2023 Elections – Danbatta

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Capital Market

Tinubu Applauds NGX N100tn Milestone, Charges Nigerians to Invest More Locally

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FG, SEC, NGX Group Forge Unified Direction on Capital Gains Tax Reform

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NGX Expands Market Offerings with Introduction of Commercial Paper Listings

Nigerian Exchange Limited (NGX) has introduced Commercial Paper (CP)...

NGX Chair: Media Coverage of Capital Market Key to Sustainable Growth

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Stanbic IBTC Capital Clinches 4 Top Honours at AIHN Investment Banking Awards 2025

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Insurance

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GCR Upgrades NEM Insurance Rating to AA+ on Sustained Profitable Growth, Stable Outlook

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Sovereign Trust Insurance Unveils Lucas Durojaiye as New MD/CEO

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Business

MTN: The Best Mobile Internet Performance in Nigeria 2025

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NIPR Postpones Annual PRICE Awards to Jan 25, 2026

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Wines of Canada Debuts in the Nigerian Market

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P+ Measurement Services Sparks Global Dialogue on Outcome-Based Measurement at 2025 AMEC Measurement Month

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ICT

Konga Partners Verve to Delight Customers with Free Shopping Vouchers

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NCC Spotlights Renewable Energy on World Consumer Rights Day

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Stanbic IBTC Capital Clinches 4 Top Honours at AIHN Investment Banking Awards 2025

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Insurance

Sovereign Trust Insurance Strengthens Partnership with TEXEM UK

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SanlamAllianz Takes Financial Education to Lagos Markets

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GCR Upgrades NEM Insurance Rating to AA+ on Sustained Profitable Growth, Stable Outlook

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Guinness Nigeria: Earnings Rebound From Q1 Low Despite Weakening Margins

Yesterday, GUINNESS released Q2-17/18 results showing net profit of NGN2.09 billion (vs. NGN2.44 billion loss last year), driven by (1) continued revenue growth, (2) better margin, and (3) lower opex and finance charges.

The net profit was equally higher compared to Q1-17/18’s NGN41.4 million, but below our NGN2.70 billion estimate and consensus expectation of NGN2.8 billion.

Revenue grew by 11% y/y and 36% q/q, sustained by festive demand, strong marketing effort, and relatively higher prices. DIAGEO (GUINNESS’ parent company) stated in a press release recently that the group enjoyed positive price in Nigeria, and that mainstream spirits and value beer (Dubic precisely) recorded faster growth during the period.

Sales volume was reported to have grown by about 17% y/y over H1-17/18. Value beer (23% y/y), Guinness (14% y/y), Malta Guinness (6% y/y), and main stream spirits (22% y/y) recorded net sales growth in the first half.

While gross margin remained higher relative to the last financial year (+601 bps y/y), we are quite surprised by the 118 bps decline compared to the first quarter. Compared to our estimate, gross margin was lower by c.650 bps, and has weakened consistently since reaching record 55% in Q3-16/17, reflecting, as we stated in the Q1 note, growing contribution of value beer and inflationary pressure on key raw material input prices (Sorghum in this case).

On the positive, opex was lower by 12% y/y and was below our estimate by 25%. Admin and distribution expenses were lower by 25% y/y and 24% y/y respectively while marketing expenses increased (following focused campaigns on Guinness) by 20% y/y. EBITDA margin of 15.4% was reported, significantly higher y/y, but lower by 96 bps q/q.

Also worth highlighting is the 65% y/y decrease in finance charges, comprising NGN583 million loss (NGN857 million in Q2-16/17) on foreign exchange transactions and N374 million (vs. NGN1.9 billion in Q2-16/17) related to interest expense on loans and borrowings and overdraft facilities.

Compared to Q1, FX loss and interest expenses were lower by 74% and 77% respectively. Gross debt now stands at NGN12.5 billion post-Rights Issue, and the consequent reduced interest burden will remain supportive of earnings for the rest of 2018.

Continued growth in revenue and the savings on both operating and financing costs bode well for GUINNESS’ earnings in 2018.

However, continued weakening margins dampens earnings growth expectation from 2019, as the effect of low revenue and finance cost bases tapers. The stock has gained 20% YtD, and positive reaction to the result is expected. Our estimates are under review.

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