Nestle Nigeria Plc has posted a pre-tax loss of N252.5 billion in the 2024 half-year, marking a 265% year-on-year decrease from the N69.1 billion pre-tax loss posted in H1 2023.
During the period, the company posted a revenue of N407 billion, representing a 55% year-on-year from the N261.8 billion posted in H1 2023.
While its gross profit hit N127.3 billion, marking a 19% year-on-year growth from N107 billion.
The company’s net loss during the period was N176.9 billion, representing a 254% decrease from N49 billion net loss posted in H1 2023.
Nestle incurred a net FX loss of N263.7 billion during the 2024 half-year, in contrast with N118.5 billion posted in H1 2023.
Key Highlights H1 2024 vs H1 2023
Revenue: N407 billion, +55% YoY
Cost of sales: N279 billion, +81% YoY
Gross profit: N127.3 billion, +19% YoY
Operating expenses: N64.2 billion, +38% YoY
Operating profit: N63.1 billion, +4& YoY
Operating margin: 15%, -8 percentage-point YoY
Net finance cost: N315.6 billion, +143% YoY
(Loss)/Profit before tax: (N252.3 billion), -265% YoY
(Loss)/Profit for the period: N176.9 billion, -254% YoY
Earnings per share: (N223.19), -254% YoY
Total assets: N869 billion, +49% YTD
Commentary: In the second quarter of the year, Nestle posted a revenue of N223.5 billion, making a 67% year-on-year growth from N133.8 billion revenue posted in Q2 2023. And during the second quarter, the company’s loss before tax hit N56.4 billion, reflecting a 40% year-on-year appreciation from the N94 billion loss posted in Q2 2023.
The stable exchange rate in the second quarter of the year was evident in its financial results. The finance costs decreased to approximately N99.3 billion, representing a 25% year-over-year reduction from the N132.4 billion reported in Q2 2023.
The bulk of Nestle Nigeria’s revenue came from Nigeria. However, the group’s revenue from exports hit N2.9 billion, marking a 656% year-on-year increase from N377 million as of H1 2023.
The 49% jump in the company’s assets in 2024 was driven by a N150 billion surplus accrued from the revaluation of the company’s property, plant, and equipment.
Nestle has been on negative equity since the end of the 2023 financial year, however, the negative equity increased by 34%, from N78 billion as of FYE 2023 to N104.9 billion at the end of 2024 H1. As the company’s retained losses declined to N255.5 billion, from N78.6 billion.
Nestle’s financial liabilities
- Apart from net foreign exchange losses due to the devaluation of the Naira, the company was also affected by the high-interest environment. Its interest expense increased to N54.4 billion in H1 2024, marking a 290% year-on-year change from N14 billion as of H1 2023.
- Of its N263 billion net FX loss on financing, about N31.9 billion was realized, while N231.8 billion was unrealized, considering the long-term nature of some of Nestle’s FX-denominated borrowings.
- This unrealized loss was reflected in the company’s loan profile, as its loans and borrowing increased to N653.9 billion, marking a 62.5% growth from N402.3 billion as of FYE 2023.
- As of FYE 2023, Nestle had a loan profile of about N402.3 billion. However, this year, the company took an intercompany loan of N12.3 billion and a new bank loan of N57 billion, while also repaying N77.3 billion.
- Nestle Nigeria has a net FX exposure of around $449 million, which includes an intercompany loan of $426.3 million. As of FYE 2023, the company had an intercompany loan of $402.5 million.
