Nestle has confirmed that it has taken a ₦3.4 billion impairment loss on its new Water Factory in Abaji, Abuja. The Abaji factory was commissioned in 2016 and compliments the existing Agbara factory in Ogun State.
In its 2018 first quarter interim results, the company revealed that “the expected business growth and gain of market share” for the factory has not been realised and “outlook for future expansion is below estimates.”
Based on this it conducted a test on the viability of the factory and decided to provide for a whopping ₦3.4 billion impairment on the factory.
“The company tested the factory facility for impairment and recorded an impairment loss of ₦3.4 billion in respect of related property plant and equipment.”
Why it matters
- This is a factory that cost the company about ₦5.6 billion to construct on a land size of about 14.6 hectares. The factory promised to create 111 new jobs and produce Nestlé Pure Life, which is regarded as the world’s largest bottled water brand.
- It was also supposed to be Nestlé Waters’ second and most modern water
processing facility in Central and West Africa, complementing the existing Agbara factory in the Ogun State.
- Interesting to note that the project was expected to also support future demand and growth in the northern and western regions of Nigeria.
- This is a two-year-old factory that was commissioned in 2016 by Vice President Yemi Osinbajo. The government was excited about the factory, especially as it is located in the FCT and promised to support the company and the private sector at large.
- Nestle reported a ₦8.6 billion profit this quarter compared to ₦8.3 billion in the prior quarter. Without this impairment, the company’s profits may have been in excess of ₦13 billion.