GUINNESS Declares N2.58bn PAT in Q2 2019 Results (SP:N70:00k)

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Wednesday, January 30, 2019 02:40PM /NSE With Additional Comments from FBNQuest Research

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Implications

On an annualised basis, Guinness’ H1 2019 PBT of N3.8bn tracks behind consensus 2019E PBT (end-June) forecast of N10.9bn. As such, we expect to see downward revisions to consensus 2019E PBT forecast and a negative reaction from the market.


Positives

Opex and net interest expense for Q2 fell by -11% y/y and -17% y/y respectively. 


Negatives

Q2 sales declined by -2% y/y to N39.7bn, missing our forecast by -7%. Further down the P&L, PBT fell by -27% y/y to N2.6bn. The y/y decline in earnings was mainly driven by a -483bp y/y contraction in gross margin to 28.7%. Relative to our forecast, PBT surprised negatively (by c.-34%). PBT also tracks well behind consensus 2019E forecast of N10.9bn. In addition to the slow-down in unit volume growth arising from the squeeze in household wallets, increased competition, price discounting and an increase in the excise duty regime are some of the headwinds exerting pressure on sales and gross margins.  

 

Year-to-date Guinness shares have underperformed the index. The shares have shed -1.4% ytd compared with the -0.8% ytd return on the ASI.   

We rate Guinness Nigeria shares Underperform. Our estimates are under review. 

 

Guinness Nigeria Q2 2019 (end-Dec) results: actual vs. FBNQuest Capital Research estimates (N millions)

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Source: NSE; FBNQuest Capital Estimates

       

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