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Guinness Nigeria Plc , the consumer goods giant, is more successful at turning shareholders’ investment into higher profit than peer rivals as the company benefited from relative stability in the foreign exchange market.
For instance, Guinness recorded return on average equity (ROAE) of 229 percent in the fifteen (15) month period that ended September of 2025, which is higher than the industry average of 44.19 percent, according to MoneyCentral calculations.
Put in another way that means for every N1 worth of shareholders equity the company generates N2.29 in profit.
That compares with Cadbury Nigeria Plc ROAE of 105 percent; BUA Foods, (105 percent); Nascon Allied Industries, (33.85 percent); Unilever Nigeria , (32.18 percent); Nigeria Breweries, (22.56 percent), Champion Breweries , (21,29 percent); International Breweries, (16.14 percent), and Dangote Sugar, 14.14 percent.
Nestle Nigeria negative ROAE of -172.59 percent stem from a negative shareholders funds as the company is recovering from a foreign exchange revaluation loss brought on by the abrupt devaluation of the Naira in 2023.
ROE or return on equity is a useful tool to assess how effectively a company can generate returns on the investment it received from its shareholders. Put another way, it reveals the company’s success at turning shareholder investments into profits.
It is glaring that Cadbury uses a high amount of debt to boost returns, as it has a debt to equity ratio of 2023.79 percent. Of course, the consumer goods giant’s import substitution and export expansion strategy continues to moderate finance costs, while an appropriate mix of debt and equity minimizes the weighted average cost of capital.
It is cheaper to use debt to fund operations because, unlike equity, it enjoys a tax shield. However, when the company borrows a lot, then it has to pay higher interest expense that undermines earnings, which puts the company in a precarious situation when earnings shrink. That is a recipe for bankruptcy.
Cadbury’s sales spiked by 98.58 percent to N594.67 billion in the period under review, driven primarily by higher sales volumes, as the firm continues to leverage Tolaram’s distribution network, alongside price increases implemented earlier in the year.
It is important to note that Tolaram’s acquisition of Diageo’s 58.02 percent stake in Guinness is driving growth and efficiency, as evidenced in an improvement in profit margin.
Cadbury has a price to earnings ratio of 19.95, fairly overvalued as many analysts have placed a Buy rating on its stock.
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