Guinness Nigeria Plc has recorded a pre-tax profit of N20.1 billion for the second quarter ending December 31, 2024. This marks a remarkable turnaround from the N8.2 billion pre-tax loss reported during the same period in 2023, making it the first quarterly profit since September 2023.
The profit recovery comes on the heels of Tolaram Group’s acquisition of Guinness Nigeria from Diageo in June 2024. Under Tolaram’s stewardship, the brewer achieved an operating profit within six months, underlining a positive shift in its operations.
The Q2 profit not only bolstered confidence in the company’s management but also helped Guinness Nigeria swing to a half-year pre-tax profit of N4.1 billion, marking a notable recovery from the N4.4 billion loss reported in the same period the previous year.
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Guinness Nigeria recorded N133.7 billion in revenue for the second quarter, bringing the total year-to-date revenue to N259.6 billion—an impressive 82.06% increase from FY 2023. Domestic sales accounted for 98.5% of total revenue, with export sales contributing a modest 1.5%.
However, the revenue boost came with cost pressures. The cost of sales surged by 107.54%, rising from N96.6 billion in FY 2023 to N200.5 billion in FY 2024. This substantial increase in production costs dampened margins despite the topline revenue growth.
Gross profit, however, grew by 28.45% year-on-year, reaching N59 billion, up from N45.9 billion in FY 2023.
Marketing and distribution expenses also saw significant growth, increasing by 33.00% to N31.6 billion compared to N23.7 billion in the prior year.
Finance Income and Net Gain
One of the key drivers of profitability was the swing in net finance charges, which had been a major drag on the company’s earnings in recent years. Despite finance expenses more than doubling to N59.5 billion, this was offset by a surge in finance income, which reached an extraordinary N63.9 billion—a nearly 2000% increase year-on-year.
The majority of this gain—99.51%—stemmed from the remeasurement of foreign currency balances, highlighting the company’s ability to leverage favorable exchange rate dynamics to its advantage.
Guinness Nigeria’s operating profit margins rebounded to 13.2% in Q2 2024, the highest since March 2022, when margins peaked at 18.5%. The operating profit for the quarter stood at N18.1 billion, a sharp contrast to the N6.8 billion operating loss recorded in Q1 2024.
This recovery underscores Tolaram Group’s effective cost management strategies and operational realignment, enabling the company to mitigate cost pressures and maximize revenue gains.
A Milestone for Tolaram Group
The Q2 profit is a significant milestone for Tolaram Group, which acquired Guinness Nigeria Plc in June 2024. Within six months of assuming control, Tolaram has demonstrated its ability to steer one of Nigeria’s largest brewers toward profitability.
The company’s performance reflects the effectiveness of Tolaram’s management approach, which has revitalized operations and positioned Guinness Nigeria for long-term growth.
As Tolaram moves forward with its plans for a mandatory takeover of shares from minority shareholders, Guinness Nigeria is expected to be delisted from the Nigerian Exchange. This move aligns with Tolaram’s strategy to consolidate its ownership and streamline operations.
However, the turnaround of Guinness Nigeria Plc is a promising development for the brewing industry and the Nigerian economy at large. With Tolaram Group at the helm, the company appears well-positioned to build on its recent successes.
However, challenges remain, particularly in managing rising production costs and sustaining revenue growth in a competitive market. The new management’s ability to navigate these challenges will determine whether Guinness Nigeria can maintain its profitability trajectory in the coming years.