Nestle Plc is a leading consumer goods company in Nigeria and is a member of the NSE 30 most capitalised stocks in Nigeria. But that is not all about this company. I have complied a list of 10 things you probably didn’t know about Nestle Plc;
Did you know
1. Nestle Plc Nigeria Chairman Chief Olusegun Osunkeye, OFR, OON has been on the board of Nestle for 40 years and counting. He is currently the Chairman and has been the held for 14 years now. He was the MD between 1991 and 1999 as well. [upme_private]
2. Nestlé CWA Limited, Ghana, with 472,308,322 ordinary shares owns 59.59% of Nestle Nigeria as at 31 December 2012
3. Nestle spent N13.2billion on Staff Cost in 2012 averaging N6million per staff. It had a staff of 2,179 employees. A total of 1,736 employees work in their production department alone
4. In 2011, the Nigerian Investment Promotion Council (NIPC) granted the Company a pioneer status for a five year period with respect to the following businesses of the Company, New Flowergate factory with an effective commencement production date of 1 January 2011 and Agbara factory capacity increase projects with respect to specific products, with a retrospective effective commencement production date of 1 August 2010. Effective tax rate for the company was 9% and 16% for 2011 and 2012 respectively
5. Nestle Plc Profit After Tax has grown 456% over the last 10years at a Compounded Annual Growth Rate of 19% Per annum. This is an astonishing feat. Pre-tax Profits for the first 9 months of 2013 is about N20.3billion 11% higher than 2012.
6. 2011 was the weakest year for the company in terms of dividend payout. Dividend payout ratio as a percentage of profits was 58%. The next lowest 65% in 2010. The company pays 73% and above in dividends in the remaining 8 years.
7. Nestle trade debtors and receivables has risen steadily this year a cause for concern considering its liquidity implications. Trade and other debtors has risen Ytd September from N13.4billion to N17.7billion a 32%. Trade and other payables has also risen 37% from N19b to N26b putting pressure on the company’s liquidity. N4.2billion for example was past due in 2012 an increase from N2.5billion in 2011. This may present risk of more write offs if the loans are not being paid
8. Nestle has total external loans of N28.2billion as at September 2013. A breakdown of their loans as contained in their 2012 Annual Report is as follows;
The bank loans are secured by a negative pledge on the Company’s assets in line with their relative exposures
(i) Two loan facilities of US $54million and US $40million which were made available to the Company in 2008 by Nestlé Treasury Centre – Middle East & Africa Limited, a Nestlé Group Company based in Dubai for general corporate purposes. Both facilities have been fully drawn down as at 31 December 2010. Both loans have tenures of 7 years (inclusive of a moratorium period of 2 years on interest payments only) commencing from March 2008 and December 2008 respectively. These facilities, which are unsecured, attract interest at 6 months USD LIBOR plus a margin of 150 basis points and 300 basis points respectively. The principal amounts become payable at the end of the seven year tenure for both loans.
The loans are intercompany loans and it is probably likely this amount will be rolled over after expiration as there currently is no cash pile available to repay the loan as a bullet payment at the end of the seven year tenure 2015 and 2017 respectively.
(ii) A loan facility of US$ 26 million which was also made available to the Company in 2011 by Nestlé Treasury Centre – Middle East & Africa Limited. The Company made a first drawdown of US$15 million in October 2011 and a final drawdown of US$11 million in March 2012 . The loan has tenure of 7 years (inclusive of a moratorium period of 2 years on interest payments only) commencing from October 2011. The facility which is unsecured attracts interest at 6 months USD LIBOR plus a margin of 300 basis points.
Another intercompany/related party loan which like above includes moratorium on interest payments for two years. A moratorium on interest doesn’t mean interest won’t be accrued for it just won’t be paid.
(iii) A N5.0 billion facility with a tenor of 4 years, commencing from May 2010. The facility was priced at 9.0% for the first 12 months and subsequently at 180 day Nibor plus 200 basis points. The total facility was fully drawn down in 2010; however N1.0 billion was converted to overdraft in 2011
This looks like an interest rate of 15% as 180 days Nibor averages 13% for November 2013 up from about 10.8% earlier in the year.
(iv) A N5.0 billion facility with a tenor of 4 years, commencing from May 2010. The facility was obtained in two tranches of N3.0 billion and N2.0 billion in 2011. The facility was priced at 9.0% for the first 12 months and subsequently at 180 day Nibor plus 200 basis points. The total facility was fully drawn down in 2011.
(v) A N2.0 billion facility under the CBN Commercial Agricultural Credit Scheme with a tenor of 7 years, commencing from July 2010. The facility is priced at 7.0%. The total facility was fully drawn down in 2011.(vi) A N1.2 billion facility under the CBN Power and Aviation Intervention Fund with a tenor of 7 years, commencing from July 2011. The facility is priced at 7.0%. The total facility was fully drawn down in 2011.
Nestle paid about N2.6billion in loans in 2012.
9. They also generate a Ebitda cash flows of about N30billion for 2013 therefore its share price currently trades at about 30x trailing Ebitda. Share price currently trades at 27x book value and 44x earnings. It is probably one of the most expensive stocks on the Nigerian Stock Exchange
10. 99% of Nestle Nigeria revenues is derived from Nigeria [/upme_private]
