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Rarely will you see Baker Magunda ,CEO ,Guinness Nigeria lamenting the unsavory state of enterprise .But early year 2020 , at the event of the third quarter of his company he did . He reeled out a number of causative factors affecting its results. He bemoaned the dwindling fortunes of his company lapsing into what has become the swam song of the players in the country in the last few years : low capacity utilization , declining sales volume and margins and lower profitability .

He captured his company’s challenges thus : “The profit margin has reduced significantly. The overall pricing on alcohol has declined over the last four years. The inflationary trend has moved from 11% to 12%. There has been an increase in tariffs. There is congestion at the ports, it costs the company over N700,000 to transport a container from the Apapa port to our factory at Ogba in Ikeja area of Lagos,” he added.

His views may not be farfetched . It has been years of massive contraction from competing brands, loss on re-measurement of foreign currency, amongst others, that threatened the existence of Guinness Nigeria as its Q3’20 YoY results show a 97.2% drop in profits for the quarter from its Q3’19 results

But now Guinness has witnessed a big turnaround as it bounced back strongly in the first quarter of 2022 financial year . .Guinness Nigeria, a subsidiary of Diageo Plc, and a leading total beverage alcohol company in Nigeria has posted a revenue of N47.46 billion for its first quarter period ended 30 September 2021 from N30bn in the previous quarter. Further details reveal it recorded strong double-digit volume growth 58% increased in revenue , 580% increased in profit after tax , 38% decreased in Net financing costs as profit before tax stood at N5.9bn 6.7% growth in Net Assets from N74bn to N79bn ; its share Price stood at N30:00k when these results were released .

The company’s CEO is ,no doubt , excited and enthusiastic. Speaking on the announcement, Mr. Baker Magunda, Managing Director/CEO, Guinness Nigeria Plc said: “In the 3 months ended 30 September 2021, Guinness Nigeria delivered exceptional results despite the challenging external environment characterized by continued restrictions related to COVID 19, high inflation and heightening operating costs.””Revenue grew by 58% to N47.4 billion, driven by resilient consumer demand and improved outlet coverage, as well as benefitting from headline price increases in key brands. Revenue grew across all key categories driven by our strategic focus brands, Malta Guinness and Guinness, as well as double-digit growth in local and imported spirits and the ready-to-drink category.”

“We are aware of the challenges in the operating environment, and regardless, our focus remains on delivering value to our stakeholders. This is why we continue to invest behind our strategic focus brands and categories, and to support the recovery of the on-trade, as seen in the 50% Marketing spend increase. Cost of sales also increased by 40%, largely due to sales volume growth, inflationary pressure, a shift towards more expensive can products and forex devaluation impacting imported materials.” He added.

The company also revealed that despite the devaluation of the naira, its net financing costs decreased by 38% as a result of reduction in the net interest cost on the back of better cash generation; and Operating profit grew 1010% to N6.5 billion.

“As a business, we will continue to remain agile in doing business in Nigeria for the consistent delivery of growth for all stakeholders. We remain conscious of the continued challenging operating environment with double-digit inflation and pressured consumer income spending. However, we continue to focus on our strategy – optimising our route to consumer, innovating at scale to satisfy our consumers and improving cost control these elements we can control. We remain confident in our People, and in the execution and resilience of our Total Beverage Alcohol strategy as a key driver of sustainable growth in the market.” Managing Director/CEO, Guinness Nigeria Plc, Baker Magunda said.


The journey to the turnaround kicked off with the release of the full year results of its 2021 financial year in June this year .

Total Asset Turnover Ratio

As of year-end, the total asset turnover ratio surged to a 5-year high of 1.02 which indicates the beverage manufacturer’s ability to maximize its assets in recent times. This is a ratio factor that shows how well a company uses the assets at its disposal in fueling sales. It is important for measuring the rate of success of a company. Simply put, the total asset turnover ratio measures a company’s efficiency in using its assets to generate revenues. Revenue and total assets grew by +53.69% and +17.52% reaching record levels for the last 5 years. It generated an income of N1.02bn for every N1bn invested in its total assets in 2021

From losses in 2020 to increases in its top and bottom-line earnings, as well as key ratios during the period. The beverage maker’s performance in 2021 was greatly influenced by the country’s improving economic activities.


The beverage manufacturer’s top-line earnings surged Y-o-Y by +53.69% to N160.42bn in 2021 beating pre-COVID-19 levels by +22%. Increased demand fuelled the rise spearheaded by the +54.95% rise in sales within Nigeria reflecting an increase in disposable income of its consumers. Since its domestic earnings account for 99.08% of the aggregate revenue, the -18.21% decline in export earnings barely made a dent in the company’s results

Its cost of sales accelerated Y-o-Y by +61.45% to N114.71bn in 2021 from N71.05bn in 2020 . However , it finance income grew Y-o-Y by +75.78% to N529.16m in 2021 from N301.04m in 2020.Finance cost rose marginally Y-o-Y by +1.95% to N4.63bn in 2021. These boosted its profit before tax (PBT) rose by +133.79% Y-o-Y to N5.77bn in 2021 from a loss after tax of N18.07bn in 2020. They have the same impacts on the net profit as profit after tax profit surged Y-o-Y by +109.98% to N1.26bn in 2021 from a loss after tax of N12.58bn in 2020 Total assets grew Y-o-Y by +17.52% from N144.15bn in 2020 to N169.41bn in 2021 as Earnings per share rose by +109.93% to N57 in 2021. .

And for the return of its fortunes the shareholders were made happy too . Guinness Nigeria approved a final dividend worth N1.01bn at N0.46k per 50k ordinary shares in 2021

By these results Guinness Nigeria recovered from the fatal blow dealt to its bottom line during 2020’s pandemic that eliminated dividend payouts in 2020. The beauty of the turnaround is palpable on its sound liquidity position , less ambitious leverage situation ,share price recovery and profitability in the financial year 2021 that are all sustained in the first quarter of 2022 financial year .


Its liquidity position also improved significantly during the session evidenced by favorable liquidity ratios and a remarkable rise in cash and cash equivalents by +580.65% in 2021. The beverage company credited it to the remarkable surge in its bank balance and short-term deposits to N30.84bn and N5.02bn, respectively in 2021. A dive into the financial statement of the company shows trade payables were up Y-o-Y by +93.07% while receivables fell by -25.11% in the period which improved liquidity and supports the significant growth seen in cash and cash equivalents of the company .Guinness Nigeria’s acid-test ratio recovered nicely Y-o-Y to 0.64 in 2021 from 0.45 in 2020. The rise in the ratio suggests that the company has more liquidity to cover its short-term debt obligations during the session. Although a quick ratio of 1.5 for a manufacturing company is more ideal

Leverage ratio: More Equity , Less Debt

The total debt of the transportation company rose by +37.21% to N1.06bn in H1 2021 However, the debt-to-equity ratio of the firm reveals that it is heavily financed through shareholders’ equity. Total equity inched up marginally to N74.29bn while total borrowings declined by -29.86% to N15.99bn during the session

Guinness Nigeria’s net-working capital further declined by -22.32% in 2021 as current liabilities swallowed the current asset of the company. The rise in current liabilities during the session was brought on by the +93.11% rise in trade payables which revealed its strong bargaining power with its suppliers The interest coverage ratio of the company rose by +175.45% to 2.13 in 2021 which reveals that the company can cover its finance cost 2.13 times. The high ratio showed the company’s potential ability to grow its operating profit to pre-pandemic levels

Share Price movement-A Dip and Recovery

Improved performance during the year was also reflected in its share price movement as the stock performed remarkably better than both the industry index and the NGX All-Share Index (ASI) The share price performance of Guinness Nigeria doesn’t reflect the movement of the food and beverage index (sectorial performance), indicating a counter-cyclical movement both against the NGX ASI and the sector index.The company’s share price surged by +57.89% while the index fell by -4.29% Although the equity price of the company showed a counter-cyclical movement with the NGX ASI and its sector index, its performance shows a reflection of economic activities in the domestic market

This reflects positive investor sentiment on the company’s recovery from pandemic woes Guinness’ share price movement was bullish over the first four months of 2021 reaching a resistance (highest) value of N33.90 in April 2021. However also in April 2021, the price dipped to N27.50 before steadying at N29 between May and July 2021. However, its share price has trended downwards since August 2021 to close at N30 as of September 24, 2021. The price dip and recovery reflected positive sentiments resulting from its improved financials and the company’s dividend announcement. The year-to-date (YTD) return of the stock was +57.89% compared to the -3.25% of the NGX ASI as of 24 September 2021 (see chart 1 below).The negative relationship between the ASI and the company’s share price is reinforced by the strong negative correlation coefficient of -0.73. When the ASI dips, investors are likely to be more optimistic about the share price of Guinness Nigeria, or at least that is what the negative correlation suggests.

Profit Before Tax (PBT)

The manufacturer’s PBT recovered remarkably Y-o-Y by +133.79% to N5.77bn in 2021. However, profitability is yet to return to pre-covid levels as PBT fell short of 2019’s PBT of N7.10bn by -18.78%. This is a direct result of the more than 60% Y-o-Y increase in the cost of sales to N114.71bn in 2021. The +91.66% increase in raw materials and other consumables and the +40.78% rise in marketing expenses led to high operating costs during the session

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