Economy
Guinness Nigeria to Focus Less on Lager Brands
By Dipo Olowookere
**As Forex Scarcity Puts Management in Tight Corner
The second-largest brewery company in the country, Guinness Nigeria Plc, has said it will pay lesser focus on its lager brands in 2020 because of the current global health crisis caused by COVID-19.
This information was disclosed by the Finance and Strategy Director of Guinness Nigeria, Mr Stanley Njoroge, while addressing analysts, the media and others at an investor call last Friday in Lagos.
According to him, the company has taken this decision because of the issue of pricing in the sector, which is making beer makers declare losses, especially when many of them cannot increase the price of their products despite a hike in excise duty on alcohol and tobacco in the country.
The federal government, in 2018, increased the levy paid by producers of alcohol and tobacco in the country and this has made manufacturers in the industry to beg for life because they have found it very difficult to pass the cost to consumers, who have low purchasing power.
Also, beer makers have not had it good this year because of COVID-19 as the federal government, just like other governments across the globe, shut down the economy to control the spread of the virus.
The main markets of beer producers; hotels, bars and others, have still not been allowed to fully operate in most states of the federation.
At the conference last Friday, Mr Njoroge said because of these issues, especially with the pricing, Guinness Nigeria will pay more attention to its stout, spirit and malt brands this year.
“We don’t have the right price in lager,” he informed participants at the gathering.
Guinness Nigeria has two brands in the lager market; Harp Lager Beer and Dubic Extra Lager, with the former more popular among consumers. The former was introduced in 1974, while the latter in 2012.
According to Mr Njoroge, the management of Guinness Nigeria believes that its stout, spirit and malt brands have the ability to help the company cushion the impact of the COVID-19 pandemic on its operations.
Also at the analyst call, he said Guinness Nigeria Plc was presently in a tight corner because of the current foreign exchange (forex) scarcity in the country.
Nigeria, which has the largest market in Africa, has been struggling with forex inflows because the Coronavirus disease has affected its main revenue source, crude oil.
Price of the black gold went as low as $20 per barrel at the global market this year and this affected the country’s forex inflows, forcing the government to lower the crude oil benchmark in the 2020 budget twice. It was first dropped from $57 per barrel to $30 per barrel and then to $28 per barrel in the approved revised appropriation bill.
Also, the Central Bank of Nigeria (CBN) had to suspend the weekly sale of forex to currency traders at the Bureaux De Change (BDC) window in March 2020, though this was also because of a ban on foreign flights as their main customers are international air passengers. The sale is expected to resume next Monday.
In April 2020, Business Post reported that offshore investors became trapped in the country because they could not repatriate their funds as a result of forex illiquidity, which forced them to reinvest in the local debt securities and equities, which caused the boom in that period.
According to Mr Njoroge, the brewer was having sleepless nights over how to refinance its $23 million debt maturing in 2021 because of the forex issue and it is already weighing options on how to manage the debt.
“We will want to refinance it but there is no foreign currency in the market at the moment,” Mr Njoroge was quoted as saying by Bloomberg, admitting that, “Foreign exchange is a big concern for us.”
As of June, the outstanding debt of Guinness Nigeria, a subsidiary of Diageo, increased by 16 per cent to N23.2 billion ($60 million), while the finance costs rose by 74 per cent to N4.5 billion ($11.7 million) at N386/$1.
Business Post reports that as at the time of publishing this report, shares of Guinness Nigeria, which closed on Wednesday at N14 per unit, were already up by 95 kobo.
By Dipo Olowookere
Investors at the Nigerian Exchange (NGX) Limited have continued to show excitement for the full-year earnings of companies on the exchange so far.
On Friday, Customs Street further appreciated by 1.01 per cent as more organization released their financial statements for the 2025 fiscal year.
During the session, traders continued their selective trading strategy, with the energy sector going up by 2.47 per cent at the close of business despite profit-taking in the banking counter, which saw its index down by 0.11 per cent.
Yesterday, the insurance space grew by 2.16 per cent, the industrial goods segment expanded by 1.70 per cent, and the consumer goods industry jumped by 0.42 per cent.
Consequently, the All-Share Index (ASI) increased by 1,722.13 points to 171,727.49 points from 170,005.36 points, and the market capitalisation soared by N1.106 trillion to N110.235 trillion from the N109.129 trillion it ended on Thursday.
Business Post reports that there were 59 appreciating stocks and 19 depreciating stocks on Friday, representing a positive market breadth index and strong investor sentiment.
The trio of Omatek, Deap Capital, and NAHCO gained 10.00 per cent each to sell for N2.64, N6.82, and N136.40 apiece, as Zichis and Austin Laz appreciated by 9.98 per cent each to close at N6.72 and N5.40, respectively.
Conversely, The Initiates depreciated by 9.74 per cent to N19.45, DAAR Communications slumped by 7.32 per cent to N1.90, United Capital crashed by 6.55 per cent to N18.55, Coronation Insurance lost 5.71 per cent to quote at N3.30, and First Holdco shrank by 5.53 per cent to N47.00.
The activity chart showed an improvement in the activity level, with the trading volume, value, and number of deals up by 33.77 per cent, 93.27 per cent, and 10.63 per cent, respectively.
This was because traders transacted 953.8 million shares worth N43.1 billion in 51,005 deals compared with the 713.0 million shares valued at N22.3 billion traded in 46,104 deals a day earlier.
Fidelity Bank was the most active with 92.4 million units sold for N1.8 billion, Chams transacted 69.2 million units valued at N310.9 million, Deap Capital exchanged 59.1 million units worth N382.7 million, Access Holdings traded 57.2 million units valued at N1.3 billion, and Tantalizers transacted 48.6 million units worth N228.2 million.
By Adedapo Adesanya
The value of the Naira contracted against the United States Dollar on Friday by 13 Kobo or 0.01 per cent to N1,366.19/$1 in the Nigerian Autonomous Foreign Exchange Market (NAFEX) from the previous day’s value of N1,366.06/$1.
According to data from the Central Bank of Nigeria (CBN), the Nigerian currency also depreciated against the Pound Sterling in the same market window yesterday by N2.37 to N1,857.75/£1 from the N1,855.38/£1 it was traded on Thursday, and further depleted against the Euro by 57 Kobo to close at N1,612.52/€1 versus the preceding session’s N1,611.95/€1.
In the same vein, the exchange rate for international transactions on the GTBank Naira card showed that the Naira lost N8 on the greenback yesterday to N1,383/$1 from the previous day’s N1,375/$1 and at the black market, the Nigerian currency maintained stability against the Dollar at N1,450/$1.
FX analysts anticipate this trend to persist, primarily influenced by increasing external reserves, renewed inflows of foreign portfolio investments, and a reduction in speculative demand.
In the short term, stability in the FX market is expected to continue, supported by policy interventions and improving market confidence.
Nigeria’s foreign reserves experienced an upward trajectory, increasing by $632.38 million within the week to $46.91 billion from $46.27 billion in the previous week.
The Dollar appreciation this week appears to be largely technical, serving as a correction to the substantial losses experienced from mid- to late January.
Meanwhile, the cryptocurrency market slightly appreciated, with Bitcoin (BTC) climbing near $68,000, up nearly 5 per cent since hitting $60,000 late on Thursday after investor confidence in crypto’s utility as a store of value, inflation hedge, and digital currency faltered.
The sell-off extended beyond crypto, with silver plunging 15 per cent and gold sliding more than 2 per cent. US stocks also fell.
The latest recoup saw the price of BTC up by 4.7 per cent to $67,978.96, as Ethereum (ETH) appreciated by 6.3 per cent to $2,021.10, and Ripple (XRP) surged by 9.5 per cent to $1.42.
In addition, Solana (SOL) grew by 7.3 per cent to $85.22, Cardano (ADA) added 6.1 per cent to trade at $0.2683, Dogecoin (DOGE) expanded by 5.4 per cent to $0.0958, Litecoin (LTC) rose by 5.2 per cent to $53.50, and Binance Coin (BNB) jumped by 2.3 per cent to $637.79, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 each.
By Adedapo Adesanya
Oil prices settled higher on Friday as traders worried that this week’s talks between the US and Iran had failed to reduce the risk of a military conflict between the two countries.
Brent crude futures traded at $68.05 a barrel after going up by 50 cents or 0.74 per cent, and the US West Texas Intermediate (WTI) crude futures finished at $63.55 a barrel due to the addition of 26 cents or 0.41 per cent.
Iran and the US held negotiations in Muscat, the capital of Oman, on Friday to overcome sharp differences over Iran’s nuclear programme.
It was reported that the talks had ended with Iran’s foreign minister saying negotiators will return to their capitals for consultations and the talks will continue.
Regardless, the meeting kept investors anxious about geopolitical risk, as Iran wanted to stick to nuclear issues while the US wanted to discuss Iran’s ballistic missiles and support for armed groups in the region.
Any escalation of tension between the two nations could disrupt oil flows, since about a fifth of the world’s total consumption passes through the Strait of Hormuz between Oman and Iran.
Saudi Arabia, the United Arab Emirates, Kuwait and Iraq export most of their crude via the strait, as does Iran, which is a member of the Organisation of the Petroleum Exporting Countries (OPEC).
According to Reuters, Iran objected to the presence of any US Central Command (CENTCOM) or other regional military officials, saying that would jeopardise the process.
The current confrontation was sparked by more than two weeks of unrest in Iran that saw authorities launch a deadly crackdown that killed thousands of civilians and shocked the world. As reports of the deaths trickled out of Iran, US President Donald Trump threatened to strike Iran if any of the tens of thousands of protesters arrested were executed.
Meanwhile, Kazakhstan’s planned oil exports could fall by as much as 35 per cent this month via its main route through Russia, as the country’s top oil company, Tengiz oilfield, slowly recovers from fires at power facilities in January.
ING analysts have pointed out Iran’s neighbour, Iraq, and a disagreement with the US as another bullish factor for oil prices. It seems Iraqi politicians favour Mr Nouri al-Maliki as the country’s next Prime Minister, but the US thinks Mr al-Maliki is too close to Iran. President Trump has already threatened the oil producer with consequences if he emerges as PM.
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