By Chioma Obinagwam
Guinness Nigeria PLC’s nine-month 2025 results confirm a sharp turnaround in earnings, driven by aggressive pricing, improved product mix, and cost containment efforts.
Confiance News gathered from a Cordros Research report on Thursday.
After a Nigerian Naira 61.65 billion loss in nine-month 2024, the company returned to profitability with a Nigerian Naira 6.72 billion profit-after-tax, highlighting the effectiveness of their transformation strategy. Looking ahead, we expect Guinness Nigeria Plc to sustain topline momentum through a focused push on margin-accretive products. Our investment case is anchored on the company’s strengthened operational execution, with strategic priorities centered on cost efficiency, volume recovery, distribution expansion, and innovation. These efforts should enhance long-term competitiveness and support continued earnings recovery. Accordingly, we project a year-end target price of Nigerian Naira 87.59 per share (from Nigerian Naira 69.58 per share) and maintain our “HOLD” rating. On our estimates, Guinness Nigeria Plc is currently trading at a 2025 estimate price-to-earnings and enterprise value to earnings before interest, taxes, depreciation, and amortization multiples of 8.3x and 1.6x, respectively.
Strong topline growth to support earnings: We project 180.8% year-on-year revenue growth in 2025 estimate, largely reflecting the extended 18-month reporting period following Guinness Nigeria Plc’s change in financial year-end. On an adjusted 12-month basis (January – December), we estimate revenue growth of 87.2% year-on-year, underpinned by volume recovery and pricing gains. Notably, Guinness Nigeria Plc has sustained higher pricing across their product portfolio, even amid heightened market competition, reinforcing brand equity and pricing power. Furthermore, ongoing enhancements to their route-to-market strategy — including expanding the number and geographic spread of sales outlets, as well as introducing sub-distributors (retail outlets) to improve last-mile delivery and deepen retail penetration — are expected to sustain sales momentum. Accordingly, we estimate gross margin will rise to 34.0% in 2025 estimate (2024 financial year: 30.5%), while earnings before interest, taxes, depreciation, and amortization margin is projected to improve to 14.2% (2024 financial year: 11.8%), supported by better cost management, improved operational efficiency, and a stronger focus on higher-margin segments like ready-to-drink beverages, spirits, and the “Guinness” brand. Overall, we expect a return to profitability, with earnings per share projected at Nigerian Naira 6.45 in 2025 estimate (versus a loss per share of Nigerian Naira 25.00 in 2024 financial year).
Stronger balance sheet as leverage moderates: In 2025 estimate, Guinness Nigeria Plc’s financial position is expected to improve significantly, supported by a return to profitability and lower financial leverage. A key milestone was the repayment of the Nigerian Naira 39.32 billion related-party loan, which reduced foreign exchange exposure and eased funding pressure. Consequently, total equity is projected to rise to Nigerian Naira 16.29 billion in 2025 estimate (2024 financial year: Nigerian Naira 2.16 billion), while the debt-to-equity ratio is expected to improve markedly to 4.9x from 18.6x in 2024 financial year. Debt servicing capacity, while still sub-optimal, is also set to strengthen, with interest coverage improving to 1.1x (2024 financial year: 0.2x).
Valuation
Confiance News reports that Cordros Research made some forecasts
According to Cordros Research, “Our target price is Nigerian Naira 87.59 per share, derived from an 80/20 blend of discounted cash flow and sector-relative valuation estimates.
“Our discounted cash flow fair value (Nigerian Naira 94.34 per share) is derived from an equal blend of free cash flow to the firm (Nigerian Naira 107.87 per share) and free cash flow to equity (Nigerian Naira 82.09 per share) estimates, assuming a 30.5Ea% weighted average cost of capital, 34.9% cost of equity, and 4.0% terminal growth rate.”
It stated that its relative valuation fair value estimate of Nigerian Naira 58.03 per share was derived using a price-to-earnings approach, applying a Nigerian peer average multiple of 9.0x (sourced from Bloomberg) to our 2025 estimate earnings per share forecast of Nigerian Naira 6.45.
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