Nestle Nigeria Plc recently announced the launch of “Golden Morn Puffs”, a variant of the company’s popular Golden Morn breakfast cereal. Speaking during the product’s launch event, Aboubacar Coulibaly, Dairy Category Manager at Nestle, stated that 94% of the grains and cereals used in its production were sourced locally.
Head to head with Kelloggs
Nestle’s new product will be competing with various cereal brands, especially Kelloggs’ Coco Pops. Coco Pops is produced and distributed in Nigeria by Kellogg’s-Tolaram Nigeria Limited, a joint venture partnership between Europe-based Kellogs and Singapore’s Tolaram Group.
In 2017, the partnership saw the construction/commissioning of a ₦6 billion factory which has a production capacity of 10,000 metric tonnes of cereals per annum.
The two products have a similar target demography which is school kids. Kelloggs also has the advantage of being a first mover.
Effect on Nestle’s bottomline.
If Nestle is able to carve a niche for itself, this would result in enhanced revenues, profits and ultimately dividends for shareholders. In the event of it failing, the company’s bottom line could take a hit.
Results for the year ended December 2017, show Revenue increased massively from ₦181 billion in 2016 to ₦244 billion in 2017.
Profit before tax also jumped from ₦21.5 billion in 2016 to ₦46.8 billion in 2017. Profit after tax had a quantum leap from ₦7.9 billion in 2016 to ₦33.7 billion, the highest in the company’s history.
The company declared a final dividend of ₦27.50 (a 175% leap from the ₦10.00 paid in 2016). Nestle had earlier paid an interim dividend of N15 per share (comprising N13 from pioneer profits and N2 from its retained earnings).
Nestle closed at ₦1493.60 in today’s trading session on the Nigerian Stock Exchange (NSE) up 5%.