Guinness Nigeria | Keeping in good spirits
Guinness Nigeria's (Guinness) revenue declined 8% y/y for the full-year period ending June 2019 (Avior: -4% y/y) due to a tough economic environment and intense competition. We believe a decline in beer volumes (and subsequent loss of market share), together with an excise increase contributed to the revenue decline. IntBrew's aggressive pricing strategy to gain market share (c.24% share of the market) forced Guinness to maintain beer prices. As a result, Guinness had to absorb input cost inflation and an excise increase, impacting operating profit (-33% y/y). We do not forecast ease in the current competitive environment over the short-term. However, we believe Guinness's spirits portfolio will provide the Group a certain level of upside. We forecast earnings to grow at a CAGR of 14% over the next three years.
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