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
The local stock market firmed up by 1.13 per cent on Friday as appetite for Nigerian stocks remained strong.
Investors reacted well to the 2026 budget presentation of President Bola Tinubu to the National Assembly yesterday, especially because of the more realistic crude oil benchmark of $64 per barrel compared with the ambitious $75 per barrel for 2025. This year, prices have been between $60 and $65 per barrel.
Business Post observed profit-taking in the commodity and energy sectors as they respectively shed 0.14 per cent and 0.03 per cent.
But, bargain-hunting in the others sustained the positive run, with the consumer goods index up by 3.82 per cent.
Further, the industrial goods space appreciated by 1.46 per cent, the banking counter improved by 0.08 per cent, and the insurance industry gained 0.04 per cent.
As a result, the All-Share Index (ASI) increased by 1,694.33 points to 152,057.38 points from 150,363.05 points and the market capitalisation chalked up N1.080 trillion to finish at N96.937 trillion compared with Thursday’s closing value of N95.857 trillion.
A total of 34 shares ended on the advancers’ chart, while 24 were on the laggards’ log, representing a positive market breadth index and bullish investor sentiment.
Austin Laz gained 10.00 per cent to close at N2.42, Union Dicon also jumped 10.00 per cent to N6.60, Tantalizers increased by 9.80 per cent to N2.69, Aluminium Extrusion improved by 9.78 per cent to N12.35, and Champion Breweries grew by 9.71 per cent to N16.95.
Conversely, Sovereign Trust Insurance dipped by 7.42 per cent to N3.87, Royal Exchange lost 6.84 per cent to trade at N1.77, Omatek slipped by 6.84 per cent to N1.09, Eunisell depreciated by 5.88 per cent to N80.00, and Eterna dropped 5.63 per cent to close at N28.50.
Yesterday, traders transacted 1.5 billion units worth N21.8 billion in 25,667 deals compared with the 839.8 million units sold for N32.8 billion in 23,211 deals in the preceding session, showing a surge in the trading volume by 76.61 per cent, an uptick in the number of deals by 10.58 per cent, and a shrink in the trading value by 33.54 per cent.
By Adedapo Adesanya
Three stocks stretched the bearish run of the NASD Over-the-Counter (OTC) Securities Exchange by 1.21 per cent on Friday, December 19, with the market capitalisation giving up N26.01 billion to close at N2.121 billion compared with the N2.147 trillion it ended a day earlier, and the NASD Unlisted Security Index (NSI) dropping 43.47 points to 3,546.41 points from 3,589.88 points.
The trio of FrieslandCampina Wamco Nigeria Plc, Central Securities Clearing System (CSCS) Plc, and NASD Plc overpowered the gains printed by four other securities.
FrieslandCampina Wamco Nigeria Plc lost N6.00 to sell at N54.00 per unit versus N60.00 per unit, NASD Plc shrank by N3.50 to N58.50 per share from N55.00 per share, and CSCS Plc depleted by N2.91 to N33.87 per unit from N36.78 per unit.
On the flip side, Air Liquide Plc gained N1.01 to close at N13.00 per share versus N11.99 per share, Golden Capital Plc appreciated by 70 Kobo to N7.68 per unit from N6.98 per unit, Geo-Fluids Plc added 39 Kobo to sell at N5.50 per share versus N5.11 per share, and IPWA Plc rose by 8 Kobo to 85 Kobo per unit from 77 Kobo per unit.
During the trading day, market participants traded 1.9 million securities versus the previous day’s 30.5 million securities showing a decline of 49.3 per cent. The value of trades went down by 64.3 per cent to N80.3 million from N225.1 million, but the number of deals jumped by 32.1 per cent to 37 deals from 28 deals.
Infrastructure Credit Guarantee Company (InfraCredit) Plc finished the session as the most active stock by value on a year-to-date basis with 5.8 billion units valued at N16.4 billion, followed by Okitipupa Plc with 178.9 million units transacted for N9.5 billion, and MRS Oil Plc with 36.1 million units traded for N4.9 billion.
The most active stock by volume on a year-to-date basis was still InfraCredit Plc with 5.8 billion units worth N16.4 billion, trailed by Industrial and General Insurance (IGI) Plc with 1.2 billion units sold for N420.7 million, and Impresit Bakolori Plc with 536.9 million units traded for N524.9 million.
By Adedapo Adesanya
It was not a good day for the Nigerian Naira at the two major foreign exchange (FX) market on Friday as it suffered a heavy loss against the United States Dollar at the close of transactions.
In the black market segment, the Naira weakened against its American counterpart yesterday by N10 to quote at N1,485/$1, in contrast to the N1,475/$1 it was traded a day earlier, and at the GTBank forex counter, it depreciated by N2 to settle at N1,467/$1 versus Thursday’s closing price of N1,465/$1.
In the Nigerian Autonomous Foreign Exchange Market (NAFEX) window, which is also the official market, the nation’s legal tender crashed against the greenback by N6.65 or 0.46 per cent to close at N1,464.49/$1 compared with the preceding session’s rate of N1,457.84/$1.
In the same vein, the local currency tumbled against the Euro in the spot market by N2.25 to sell for N1,714.63/€1 compared with the previous day’s N1,712.38/€1, but appreciated against the Pound Sterling by 73 Kobo to finish at N1,957.30/£1 compared with the N1,958.03/£1 it was traded in the preceding session.
The market continues to face seasonal pressure even as the Central Bank of Nigeria (CBN) is still conducting FX intervention sales, which have significantly reduced but not remove pressure from the Naira. Also, there seems to be reduced supply from exporters, foreign portfolio investors and non-bank corporate inflows.
President Bola Tinubu on Friday presented the government’s N58.47 trillion budget plan aimed at consolidating economic reforms and boosting growth.
The budget is based on a projected crude oil price of $64.85 a barrel and includes a target oil output of 1.84 million barrels a day. It also projects an exchange rate of N1,400 to the Dollar.
President Tinubu said inflation had plunged to an annual rate of 14.45 per cent in November from 24.23 per cent in March, while foreign reserves had surged to a seven-year high of $47 billion.
Meanwhile, the cryptocurrency market was dominated by the bulls but it continues to face increased pressure after million in liquidations in previous session over accelerating declines, with Dogecoin (DOGE) recovering 4.2 per cent to trade at $0.1309.
Further, Ripple (XRP) appreciated by 3.9 per cent to $1.90, Cardano (ADA) rose by 3.5 per cent to $0.3728, Solana (SOL) jumped by 3.4 per cent to $126.23, Ethereum (ETH) climbed by 2.9 per cent to $2,982.42, Binance Coin (BNB) gained 2.0 per cent to sell for $853.06, Bitcoin (BTC) improved by 1.7 per cent to $88,281.21, and Litecoin (LTC) soared by 1.2 per cent to $76.50, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 each.
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