Nigeria | NGX

Guinness Nigeria Plc released its Q2 2024 (Oct-Dec) unaudited numbers. The renowned foreign extra stout brewer recorded double-digit Revenue growth of 26.6% y/y to N83.06bn (Q2 2024) from N65.6bn (Q2 2023). Likewise on a q/q basis, Revenue grew by 39.5% to N83.06bn from N59.54bn recorded in Q1 2024. The Q2 2024 impressive topline performance aligns with our expectation that revenue will grow significantly due to holiday season demand.

FX regime changes and the elimination of the longstanding subsidy on Petroleum Motor Spirit (PMS) were the catalysts that initiated a series of events propelling the Nigerian equities market to an impressive 45.90% gain by the year's close. This marked the fourth consecutive year of positive returns for the market. Despite the strong macroeconomic headwinds that characterized the year, the reforms renewed investor confidence and resulted in massive revaluation gains for many banks. The positive momentum was further fueled by several corporate actions and expectations of renewed foreign inflows. The market has begun 2024 on a positive note and we believe the momentum can be sustained especially if the broader economy starts to realize gains from the implemented reforms.

After the currency-induced plunge in the bottom line of Nigerian FMCG companies, the sector may be set for a slight recovery in 2024 despite projected tamer revenue growth and elevated borrowings. Our optimism is supported by debt restructuring campaigns, aggressive cost optimisation, and capacity expansion, all of which bode well for earnings.

As Nigeria's cement industry reflects on a challenging 2023, characterised by demand-stifling events like the cash crunch orchestrated by a poorly executed currency redesign policy, the material currency devaluation, and bouts of heavy rainfall, its hope for a gradual recovery in 2024 feeds off the return to relative macroeconomic normalcy and early gains from tough policy reforms.

Banking earnings touched new highs in 9M’23, aided by material revaluation gains driven by the policy reforms on FX management that led to significant currency depreciation. In 2024, after-tax earnings may be relatively contained due to an expected tamer naira weakening (vs in 2023) as the Central Bank of Nigeria (CBN) intensifies efforts to stabilise the naira. Nonetheless, we see legroom for robust banking core-operating performance in 2024 due to the following reasons.

We begin our outlook conversations with context. Nigeria, a country with 37.0% of its population living on less than $1.9 per day, is facing an inflation rate of over 28.0%, an inability to produce its most important economic resource optimally, and the threat of sustained departure of some of its finest human resources.