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
Renewed buying interest raised the Nigerian Exchange (NGX) Limited by 0.33 per cent on Monday, with gains recorded in almost all the major sectors of the bourse at the close of transactions.
According to data harvested by Business Post, the insurance counter expanded by 0.62 per cent, the banking index grew by 0.59 per cent, the energy sector appreciated by 0.40 per cent, and the consumer goods space improved by 0.10 per cent, while the industrial goods segment closed flat.
When the closing gong was struck by 4 pm to signify the close of business on Customs Street, the All-Share Index (ASI) was up by 1,113.76 points to 243,707.07 points from 242,593.31 points, and the market capitalisation chalked up N714 billion to close at N156.308 trillion compared with the previous session’s N155.594 trillion.
Interest in Nigerian stocks yesterday resulted in a rise in the activity level, with the trading volume soaring by 17.86 per cent to 717.2 million units from 608.5 million units. The trading value advanced by 77.19 per cent to N56.7 billion from N32.0 billion, and the number of deals surged by 36.22 per cent to 73,321 deals from 53,826 deals.
FCMB was the busiest stock during the trading day, with a turnover of 152.3 million units worth N1.8 billion, Premier Paints exchanged 61.0 million units valued at N135.3 million, Dangote Cement traded 34.7 million units for N29.7 billion, The Initiates sold 32.8 million units worth N1.0 billion, and Jaiz Bank transacted 32.6 million units valued at N293.3 million.
Yesterday, the market breadth index was positive after the exchange closed with 37 price gainers and 28 price losers, representing strong investor sentiment.
International Energy Insurance gained 9.92 per cent to settle at N7.98, the Initiates added 9.91 per cent to its share price to quote at N32.15, ABC Transport garnered 9.68 per cent to trade at N6.80, Abbey Mortgage Bank grew by 9.63 per cent to close at N10.25, and Linkage Assurance soared by 9.36 per cent to N1.87.
On the flip side, Fidson Healthcare gave up 10.00 per cent to finish at N122.85, Academy Press crashed by 9.70 per cent to N7.45, RT Briscoe depreciated by 9.43 per cent to N13.45, SUNU Assurances tumbled by 9.37 per cent to N4.06, and Learn Africa decreased by 8.70 per cent to N10.50.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange recorded a marginal 0.05 per cent drop on Monday, June 8, depleting the market capitalisation by N1.27 billion to N2.606 trillion from N2.607 trillion, and cutting the Unlisted Security Index (NSI) by 2.12 points to 4,356.20 points from the previous 4,358.32 points.
The contraction witnessed during the session was triggered by a price loser, which overpowered that gains recorded by two securities on the trading platform.
Data indicated that MRS Oil Plc lost N6 at the close of business to settle at N165.00 per share compared with last Friday’s price of N171.00 per share.
Conversely, Lighthouse Financial Services Plc added 9 Kobo to sell at N1.03 per unit versus 94 Kobo per unit, and Central Securities Clearing System (CSCS) Plc appreciated by 8 Kobo to N78.48 per share from N78.40 per share.
The volume of securities traded by investors yesterday soared by 51.9 per cent to 213,188 units from 140,345 units, and the value of securities increased by 12.6 per cent to N20.2 million from N17.9 million, while the number of deals executed fell by 7.4 per cent to 25 deals from 27 deals.
Great Nigeria Insurance (GNI) Plc remained the most traded stock by value on a year-to-date basis, with 3.4 billion units sold for N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units valued at N6.5 billion, and CSCS Plc with 64.8 million units exchanged for N4.4 billion.
GNI Plc also remained as the most traded stock by volume on a year-to-date basis, with 3.4 billion units worth N8.4 billion, trailed by Infracredit Plc with 2.3 billion units transacted for N6.5 billion, and Resourcery Plc with 1.1 billion units traded for N415.7 million.
By Adedapo Adesanya
The Naira opened the new trading week on a negative note on Monday at the Nigerian Autonomous Foreign Exchange Market (NAFEX) and the black market.
At the parallel market, the Nigerian currency weakened against the US Dollar by N5 to sell for N1,380/$1 compared with the preceding session’s rate of N1,375/$1, and at the GTBank FX desk, it shed N1 to trade at N1,373/$1 versus N1,372/$1.
At the official market, it lost 63 Kobo or 0.05 per cent against the Dollar during the session to close at N1,362.84/$1, in contrast to last Friday’s value of N1,362.21/$1.
However, the Nigerian Naira gained N2.30 against the Pound Sterling at the spot market yesterday, quoting at N1,821.29/£1 compared with the previous rate of N1,823.59/£1, and improved against the Euro by 23 Kobo to settle at N1,574.35/€1 versus N1,574.58/€1.
Data from the Central Bank of Nigeria (CBN) showed that interbank forex turnover increased to $92.248 million across 90 deals, from $73.565 million last Friday.
On the policy front, participants believed that the application of the fourth edition of the Foreign Exchange Manual of the central bank, which introduces updated guidelines for foreign exchange transactions and tightening compliance requirements for authorised dealers and market participants, will enhance market flexibility and ease previous restrictions.
Meanwhile, the cryptocurrency market snapped from recent declines, jolted by Strategy’s purchase of 1,550 Bitcoin for approximately $101 million, increasing its total holdings to 845,256 BTC. The company raised $181 million through common stock sales, using the proceeds to fund the bitcoin purchase and increase its cash reserves to $1 billion, pushing the price of the coin higher by 3.2 per cent to $63,731.69.
Cardano (ADA) appreciated by 8.4 per cent to $0.1738, Ethereum (ETH) rose by 5.2 per cent to $1,711.54, Solana (SOL) expanded by 5.1 per cent to $67.82, and Ripple (XRP) improved by 4.9 per cent to $1.18.
Further, Dogecoin (DOGE) jumped by 4.3 per cent to $0.0873, Binance Coin (BNB) soared by 2.7 per cent to $609.50, and TRON (TRX) increased by 0.7 per cent to $0.3274, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $0.9997 and $0.9998, respectively.
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