Meristem Securities’ outlook for Nigerian brewers
Recently released earnings by brewery companies in Nigeria have been largely bearish. Busola Akinyele, Investment Research Analyst at Meristem Securities joins CNBC Africa for more.
Wed, 06 May 2020 14:07:56 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- Major brewing companies in Nigeria, including Nigerian Brewers and Guinness, reported declining earnings in Q1.
- International Brewers saw a modest revenue increase, while Guinness attributed its drop to halted production in Ghana.
- The industry grapples with supply chain disruptions and reduced demand due to COVID-19 restrictions, prompting companies to innovate and adapt.
Nigeria's brewing industry has recently witnessed a challenging quarter as earnings for major players like Nigerian Brewers, Guinness, and International Brewers have shown a significant decline. Busola Akinyele, Investment Research Analyst at Meristem Securities, shared insights on the Q1 results in a CNBC Africa interview. Nigerian Brewers and Guinness reported a decline in top-line revenue, while International Brewers recorded a modest increase. Guinness attributed its revenue decrease to the halt in production at its Ghana facility, leading to a drop in export sales. Operating expenses rose across the board, impacting bottom-line earnings. Nigerian Brewers saw a 31% decline, Guinness a 67% drop, and International Brewers remained in a loss position. Investors have reevaluated stock valuations, with Guinness trading at unusually low prices. The industry faces ongoing challenges amidst the global pandemic. Akinyele highlighted the supply chain disruptions faced by brewers, from production to distribution. Movement restrictions affected product delivery, forcing companies to innovate and streamline operations. On the demand side, reduced social gatherings and limited events have impacted sales volumes. However, resilient brewers have adapted to the changing landscape, implementing strategies to navigate the evolving market dynamics. With the gradual easing of restrictions, the industry anticipates a slight recovery in economic activities. Despite the current uncertainties, breweries that demonstrate flexibility and efficiency in adapting to new norms are better positioned to weather the storm.