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Company Results

Guinness gains on NSE despite N17 billion pre-tax loss

The decline in Guinness’ share price came amid the loss reported in the company’s financial results.

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Why we experienced profit declines- Guinness Nigeria

The shares of Guinness Nigeria Plc, the second-largest brewer by market capitalization, closed the trading session for last week on a positive note, with the shares gaining 30 kobo despite a pretax loss of N17 billion in 2020, according to its financial report.

According to trading activities on the floor of the Nigeria Stock Exchange last week, the share price of Guinness went down cumulatively by 11.54% on Friday 28th and on Monday 31st of August. When disaggregated, this translates to 9.29% and 2.47% declines respectively. The declines came amid the loss reported in the company’s financial results, released to the public domain on Friday 28th, August.

READ: Analysis: A better way to price Guinness shares

Buying pressure drove the shares of Guinness higher to close the week 2.1% and 4.71% higher than N14.15 and N13.80 the shares closed at on Friday 28th and Monday 31st, August, respectively. This increase indicates a price rejection at N13.80 on Tuesday, which is 6.15% higher than the low of N13.00 37 days ago.

Subsequently, the 65 kobo correction from Tuesday till the end of the trade on Friday put the shares higher, when compared with the N14.15 the stock closed at on Friday, with previous losses retraced by 4.71% or 65 kobo.

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Ideally, it is imperative to note that this is the first time this year that a double price rejection/correction will be spotted in the price activity chart of Guinness, with the previous low of N13.00, a resistance from 30 days ago, lower than the recent rejection at N13.80 on Tuesday.

Also, It is important to note that Guinness share price has fallen by 51.91% YTD from N30.05 on January 2nd. In the same vein, it has also lost 5 kobo since the market opened for the third quarter, 65 days ago.

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Underlying fundamentals of Guinness

Nairametrics had earlier reported that Guinness Nigeria Plc posted a loss after tax of N12.57 billion for the period ended 2020, owing to the knock-on effect of the COVID-19 lockdown on the trade segment of the business across all markets, and drawback in production, sales and revenues.

Also, the book value and the bottom line of the company were affected by the comprehensive review of certain categories of assets, which were generating suboptimal returns. This is in line with the company’s long-term strategy of delivering value to shareholders. The move led to N13.8 billion impairment loss on financial assets and PPE.

READ: This brewer keeps struggling to win as Nigeria’s beer war rages on 

Key changes in view

As at 30 June 2020, the company has a five-year outstanding related party loan of $22.5 million included in loans and borrowing which expires next year. The Naira equivalent is N8.7 billion million (2019: N8.295 million). The loan has an interest rate of 3 months LIBOR plus 475 bps.

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Guinness is thus faced with the decision to roll over the loan, but is yet to decide whether to keep it as a dollar debt or convert to a local-currency loan.

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With sales and profit targets unmet, the company will prioritize stout, spirit and malt brands in 2020 and focus less on lager, as it aims to grow the business and cushion the impact of the COVID-19 pandemic on operations.

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Company Results

eTRANZACT International Plc records a loss of N72.6 million in 9M 2020.

eTRANZACT International Plc has posted a loss of N72.6 million for the period ended September 2020.

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eTranzact International Plc proposes rights issue, Etranzact International Plc Announces Notice of Board Meeting

eTRANZACT International Plc has posted a loss of N72.6 million for the period ended September 2020 – a 15.3% decline.

This is according to its latest financials sent to the Nigerian Stock Exchange market today.

Key highlights of the 2020 9M financials include:

  • Revenue declined to N5.45 billion, down by -16.1% Y-o-Y.
  • Both Loss Before Tax and Loss After Tax deteriorated to a loss of N72.6 million, up by +15.3%.
  • Cost of sales declined to N5.17 billion, down by -15.3% Y-o-Y.
  • Gross profit declined to N281.7 million, indicating a loss of 28.1% Y-o-Y.
  • Administrative expenses declined to N492.1 million, down by -0.5% Y-o-Y.
  • Investment income declined to N31.33 million, indicating a decrease of -48.4% Y-o-Y.
  • Finance cost decreased to N5 million, down by -42.8% Y-o-Y.
  • Property, plant and equipment increased to N667.9 million, up by +20.1% within the period under view.
  • Total assets grew to N6.95 billion, up by +2.8% within the period under view.

What you should Know

eTRANZACT International Plc has been battling to recover since the scandal that rocked the company in 2018, the same year it posted a loss of N268 million. By Q2 2019, the firm seemed to have overturned the deficit, posting a profit of N96.09 million.

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However, since the beginning of the year, the firm had subsequently recorded a loss in both quarters of the year. These losses seemed to have eroded the gains made by the firm in 2019.

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Business News

Tantalizers suffers loss of N245 million in 2020 9M

Tantalizers suffered a pre-tax loss of N245million between January 1st and September 30th, 2020.

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Tantalizers Plc, a leading fast-food company in Nigeria, has disclosed that it suffered a pre tax loss of N245million between January 1st and September 30th, 2020.

This is according to the information contained in its unaudited financial statement for the period ended 30 September 2020, which was sent to the floor of the Nigerian Stock Exchange today.

Key highlights of its 2020 9M results

  • Revenue was N655.93 million, compared to N1.26 billion it generated same period in 2019.
  • Cost of Sales was N355.44 million, compared to N729.71 million it incurred same period in 2019.
  • Other income was N114.94 million, compared to N268.27 million it made same period in 2019.
  • Administrative Expenses was N606.19 million, compared to N940.90 million it incurred same period in 2019.
  • Operating loss was N189.30 million, compared to operating profit of N127.05 million.
  • Finance cost was N55.70 million, compared to N94.40 million it paid same period in 2019.
  • Loss before tax was N245.00 million, compared to profit after tax of N22.17 million it made same period in 2019.

Operational review

The on-trade-channel of the leading fast-food company with over 60 restaurants across Nigeria as of 30th April, 2017 was severely affected by the COVID-19 pandemic, as the widespread economic vulnerabilities in the nation disrupted the business segment of the company.

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The lockdown and the restriction placed on businesses operating in the on-trade-market affected the on-premise demand and sales of these companies, which led to decline in the sales and net revenue of Tantalizers Plc.

However, the core business segment of Tantalizers was not the only segment affected, as other revenue-generating segments like Rent, advertisement and franchising declined over this period.

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Company Results

Afreximbank’s African commodity index dips by 1% q-o-q in Q3 2020

Afreximbank African Commodity Index for Q3 2020 shows that the composite index fell marginally by 1% q-o-q.

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The recently released Afreximbank African Commodity Index (AACI) for Q3 2020, shows that the composite index fell marginally by 1% q-o-q, mainly on account of price dip in the energy sub-index.

However, the agricultural commodities sub-index emerged the top performer in the quarter; thus, growing more than the gains achieved in base and precious metals.

According to the report, the highlights of the AACI for Q3-2020 are as follows:

  • Energy sub-index fell by 8%, largely as a result of oil price fluctuations.
  • Agricultural commodities sub-index rose by 13%, partly as a result of favorable weather conditions in the major producing countries.
  • Sugar prices gained based on the strong expectations of firm import demand from China and fears that Thailand’s crop could shrink in 2021 following a drought.
  • Cocoa futures enjoyed a pre-election premium in Ghana and Côte d’Ivoire.
  • Cotton rose to its highest level since February 2020, as a result of the threat of Storm Sally on the US cotton harvest, coupled with poor field conditions in the US.
  • Coffee rose by 10% as La Nina weather conditions in Vietnam, the world’s largest producer of Robusta coffee, raised the possibility of a shortage in exports.
  • Base metals sub-index rose by 9%, due to several factors including ongoing supply concerns for copper in Chile and Peru and strong demand in China.
  • Precious metals sub-index rose by 7% in the quarter, as the demand for haven bullion continued in the face of persistent economic challenges triggered by COVID-19 and heightening geopolitical tensions.
  • In addition, Gold enjoyed record inflows into gold-backed exchange-traded funds (ETFs), which offset major weaknesses in jewelry demand.

What they are saying

According to Dr. Hippolyte Fofack, Chief Economist at Afreximbank, “Commodity prices in Q3-2020 have largely been impacted by COVID-19. The pandemic has exposed global demand shifts that have seen the oil industry incur backlogs and agricultural commodity prices dwindle in the first half of the year.

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“The outlook for 2021 is positive — however conservative the markets are. We hope to see an increase in global demand within Q1 2021 and Q2 2021, buoyed by the relaxation of most COVID-19 disruptions and restrictions.”

What you should know

  • AACI is a trade-weighted index designed to track on a quarterly basis, the price movements of 13 different commodities that are of interest to Africa and the Bank.
  • To effectively mitigate risks associated with commodity price volatility, AACI highlights areas requiring pre-emptive measures by the Bank, its key stakeholders and policymakers in its member countries, as well as global institutions interested in the African market.
  • AACI highlights the generally conservative market sentiment with consensus forecasts predicting prices to stay within a tight range in the near term, with the exception of crude oil, coffee, crude palm oil, cobalt, and sugar.
  • African Export-Import Bank (Afreximbank) is a pan-African multilateral financial institution with the mandate of financing and promoting intra-and extra-African trade — owned by African governments, the African Development Bank, and other African multilateral financial institutions, as well as African and non-African public and private investors.

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