Guinness Nigeria had a very tough close to its FY’20, dealing with weak demand in the last quarter as well as significant impairments in the period.
Revenue for the beverage producer declined 72% y/y in Q4’20, dragging FY’20 Revenue down 21% y/y to ₦104.4 billion.
For Q3, we expect a much improved, albeit still slow rise in volume rollout, following a gradual increase in patronage of bars and other alcohol sale points. Thus, we foresee an 8.1% y/y decline in Guinness’ Q1’21 Revenue to ₦24.7 billion.
Driven by the ongoing spirits play strategy, we foresee a slight 0.6ppts y/y improvement in the Gross margin to 30% in Q1, as spirits have higher margins than lager.
Although Guinness increased its borrowings (+45% between Q1 and Q2), Interest expense declined by 39% for the quarter. Thus, we expect that this will set the tone for the first quarter of the FY’21 and as such we expect the company’s finance costs to remain stable in Q1’21.
Finally, we expect a PAT of ₦1.0 billion for the quarter (Q1’20: -₦0.3 billion).
