After several quarters in the red, Guinness Nigeria Plc has finally clawed its way back to profitability.
The company reported a pre-tax profit of N20.1 billion for Q2 2025, a stunning reversal from the N8.2 billion loss posted in the same period last year.
This marks the first quarterly profit since September 2023, when the company recorded N3.8 billion in pre-tax earnings for the first quarter of its 2024 financial year.
The result is even more significant given that it coincides with a change in ownership. Tolaram Group, which took over Diageo’s 58.02% stake in June 2024, is already making its presence felt.
In just six months, Guinness Nigeria has posted a quarterly pre-tax profit, suggesting that the new owners have moved quickly to plug inefficiencies.
At the half-year mark ended December 31, 2024, Guinness Nigeria’s financials reflect a substantial turnaround:
- Pre-tax profit: N4.1 billion, reversing a N4.4 billion loss in the first half of the 2025 financial year.
- Revenue: N259.6 billion, an 82.06% increase compared to the 2023 revenue.
- Net loss after tax: N303 million, a significant improvement from the N5.23 billion net loss in the first half of 2024.
The numbers suggest a company in recovery mode. But is this rebound sustainable?
The Good: Growth, digitalization, and a new liquor strategy
New CEO Girish Sharma has wasted no time in setting a clear strategy for Guinness Nigeria under Tolaram. Four priorities stand out:
- Bringing profitability back.
- Enhancing production efficiency.
- Building a strong team.
- Pursue volume growth, improve reach and distribution
Sharma has also emphasized digitalization as a key pillar of the company’s transformation.
“We have identified areas where we could pursue volume growth, and that is where we will be investing aggressively,” he said during the first half 2025 Investors’ Conference Call.
One of these areas is product expansion. Guinness Nigeria is preparing to launch new liquor brands, aiming to redefine its market positioning.
The company is betting that premiumization and innovation will help sustain revenue momentum.
The Bad: Rising costs and weak margins
Despite the impressive revenue growth, profitability remains fragile. The gross profit margin declined from 32.2% to 22.7%, despite a 28.4% increase in gross profit (N59.01 billion in the first half of 2025 from N45.94 billion in the first half of 2024).
The pressure is coming from higher input costs due to inflation and forex volatility. Operating profit declined to N11.26 billion, compared to N16.40 billion in the first half of 2024.
Guinness Nigeria is still feeling the effects of Nigeria’s economic instability. Inflation remains high, consumer spending power is weak, and FX revaluation losses have dented the company’s bottom line.
Valuation concerns: Are investors getting ahead of fundamentals?
Guinness Nigeria’s price-to-sales and price-to-book value multiples have soared to 0.59x and 82.79x, respectively. This suggests that investor sentiment has diverged from corporate fundamentals.
The market appears to be pricing in future growth under Tolaram, but these valuation levels could also indicate over-exuberance.
If the company fails to sustain earnings momentum, a market correction could follow.
Stock performance: A mixed picture
Guinness Nigeria’s stock has had a volatile ride over the past year. In early 2024, the share price fell to N44.50 in March from N66.00 in January, reflecting investor concerns over continued losses.
It recovered in the second half of 2024, averaging N64.24, but still lagged its 52-week high of N71.50.
By the end of 2024, the stock closed at N70.25, delivering a 6.44% return, which was significantly below the 37.65% return of the NGX All-Share Index.
So far in 2025, the stock has performed better, gaining 9.61% and closing at N77 per share on February 7, 2025. However, at rank 58 on the NGX, Guinness remains a mid-tier stock rather than a market leader.
The uncertainty: Can Tolaram replicate its consumer goods success?
Tolaram Group’s experience in Nigeria’s FMCG space gives reason for optimism. However, the alcoholic beverage industry presents unique challenges.
Unlike staples such as noodles or dairy, beer and spirits are luxury discretionary products, meaning consumer demand is more sensitive to economic downturns.
Guinness Nigeria still faces liquidity constraints and weakened consumer spending. The macroeconomic headwinds that contributed to previous losses have not disappeared.
Tolaram’s influence might improve operations, but the real test will be whether Guinness Nigeria can maintain profitability beyond one strong quarter.
Final thoughts: A turnaround, but not a guarantee
The Q2 profit is a milestone, but it does not guarantee sustained success. Investors are optimistic, but without sustained profitability, the share price rally could lose steam.
For Guinness Nigeria to truly turn the corner, it must:
- Sustain margin recovery despite inflationary pressures.
- Successfully execute new product launches.
- Strengthen its balance sheet to weather economic shocks.
Tolaram has a reputation for long-term strategic execution, but this is still the early innings.
The next few quarters will determine whether Guinness Nigeria is on the verge of a full-scale renaissance or if this profit was just a temporary reprieve before another hangover.
