Nestle Nigeria Plc reported a pre-tax loss of N86.5 billion in the second quarter of the year ended June 30, 2023.
The losses contributed to wiping our Q1 profits taking its half-year profits to N61.6 billion one of the worst performance in years.
Nestle Nigeria’s losses are mainly due to a forex loss of N123.7 billion which impacted its profits.
Key highlights for Q2 2023
- Revenue N123.79 billion +19.2%
- Gross profit N55.6 billion +50.6%
- Operating profit N32.1 billion +62.5%
- Finance cost N121.6 billion +2547%
- Pre-tax losses of N86.5 billion -644%
- Total debts N299.7 billion vs N172.7 billion (2023 Q1)
- Working capital N61.9 billion vs N97.9 billion (2023 Q1)
- Gross profit margin 41% vs 32.9% YoY
- Operating profit margin 24% vs 17.6%
- Retained earnings -N49 billion
- Net assets wiped out now -N48.6 billion
Insights– Nestle Nigeria’s result was mostly impacted by foreign exchange losses which printed at a whopping N123.7 billion during the quarter.
- The impact of the losses essentially wiped out Nestle’s retained earnings which could impact its ability to pay dividends this year if it is not able to address the issues.
- Its net assets are also wiped out in one fell swoop as a result of the forex losses. Nestle had a net asset of N46.4 billion as of the first quarter of the year
- Nestle has an intra-group loan of $454 million which may have contributed to the forex losses the company experienced.
- Nestle might at this rate either raise capital to close the negative equity or convert some of the loans to equity or expect succor from forex appreciation.
