Beverage company, Nestle Nigeria has recorded N79 billion loss after tax even as it had made a heavy investment to improve profitability and expand it
Beverage company, Nestle Nigeria has recorded N79 billion loss after tax even as it had made a heavy investment to improve profitability and expand its reach in 2023.
This will be the company’s worst performance since 2012 as Nestle Nigeria had the ambition of leveraging on its sterling performance in 2022 when it posted a N49 billion profit after tax.
However, Nestle had to struggle with naira scarcity and subsequently currency devaluation as a result of the floating of the naira. By December 2023, the naira had depreciated by around 98 per cent.
Although the company saw an impressive surge in sales by N100 billion to N547.1 billion in 2023 from the N446.8 billion revenues in 2022, the company hit a roadblock as net finance cost slashed the gains that were due to the company.
From a net finance cost of N21 billion in 2022, Nestle saw a N212 billion rise to N233.5 billion in 2023 as a result of the naira devaluation. Nestle reported a foreign exchange loss of N195 billion which was the major reason for the overall loss
The company experienced a 280 per cent loss in net profit to N79.47 billion while shareholders’ funds were wiped out. The company that boasted of N30.2 billion shareholders’ fund in 2022 fell into a negative equity of -N78 billion by December 2023.
This was a result of Nestle’s total liability rising to N659.8 billion while the total assets were N581.7 billion.
The company is optimistic that it will return to profitability when the “Macroeconomic situation stabilizes, the same would yield positive impact to the overall economy as well as company results.
“The company has taken robust margin management and cost management initiatives to address significant forex volatility and cost inflation.”
The company invested N61 billion in the expansion of its lines at the three factories located in Agbara, Sagamu and Abaji.
To outsmart competitors, Nestle launched five new products, Maggi Soya Chunks, Milo 3-in-1, Cerelac Bag-n-Box and Milo Enersnakz. The company also ventured into plant-based nutrition through NIDO Soya.
No Interim or final dividend was declared for the 2023 financial year, the company said.
