A Significant Turnaround
Guinness Nigeria Plc has released its second-quarter earnings, revealing a pre-tax profit of N20.1 billion. This marks a significant reversal of fortunes from the pre-tax loss of N8.2 billion reported in the same quarter of the previous year. Furthermore, their misfortune and takeover by Tolaram last year was an internet sensation.
A First in Quarterly Profits
Consequently, this is the first quarterly profit posted by Guinness Nigeria Plc since September 2023. Meanwhile, the company reported a profit of N3.8 billion in its first quarter of 2023.
Tolaram Takeover Impact
Notably, the profit boost comes six months after Tolaram Group completed its takeover of operations from Diageo. Tolaram acquired the Guinness Nigeria franchise in June 2024. Meanwhile, they took over the company during tough economic situation in Nigeria.
Half-Year Pre-Tax Profits
As a result, the second-quarter profit helped increase half-year pre-tax profits to about N4.1 billion. This enabled the company to swing to its first half-year profit since December 2022.
Revenue Surge
Guinness Nigeria Plc reported revenue of N133.7 billion for the quarter. This brings the year-to-date figure to N259.6 billion, an 82.06% increase compared to the full year of 2023.
Domestic Sales Contribution
Domestic sales accounted for a substantial 98.5% of total revenue. Meanwhile, export sales contributed the remaining 1.5%. In addition, the figure posted showed Tolarem’s strategic economic acumen.
Cost of Sales and Gross Profit
Despite the strong revenue growth, the cost of sales surged by 107.54% year-on-year. However, the company recorded a gross profit increase of 28.45% year-on-year, reaching N59 billion.
Marketing and Distribution Expenses
Marketing and distribution expenses also increased significantly, rising by 33.00% to N31.6 billion.
Operating Profit
With rising operational expenses, operating profit declined to N11.2 billion. This is down from N16.3 billion reported in the previous year.
Primary Driver of Profitability
Nairametrics analysts observed that the primary driver of Guinness Nigeria’s profitability was a surge in topline revenue.
Operating Profit Margins
Operating profit margins rebounded to 13.2%, the highest since March 2022.
Net Finance Charges
Net finance charges, which had been a major driver of losses in recent years, swung to a net gain this quarter.
Finance Income
Finance income totaled N63.9 billion, primarily driven by gains from the re-measurement of foreign currency balances.
New Ownership and Future Prospects
The swing in profitability will be seen as a significant boost for the new owners of Guinness Nigeria Plc. Tolaram Group, which acquired Guinness in June 2024, has reported its first operating profit for the company in less than six months under its management.
Delisting from Nigerian Exchange
Guinness Nigeria is likely to be delisted from the Nigerian Exchange as the new owners move forward with a mandatory takeover of the company’s shares from minority shareholders.
Conclusion
In conclusion, Guinness Nigeria’s reported profit of N20 billion marks a significant turnaround for the company. With Tolaram Group’s takeover and the surge in revenue, the company’s future prospects look promising.
