Nestlé Nigeria Posts N104bn Loss For 2023

Food and beverage companies Nestlé Nigeria Plc has posted a loss before income tax of N104 billion for the year 2023 compared to a profit before income tax of N71 billion for 2022.

Nestle Nigeria Plc posted more than N104 billion loss before tax in 2023, details from its audited financial statement for 2023 showed. The latest loss which damaged the consumer goods company earnings came as a result of large foreign currency liabilities.

There was a significant increase in revenue in 2023, this top-line growth was shadowed by increased net finance costs spurred by FX losses after it revalued its balance exposures to foreign currency.

Its audited result showed that Nestle Nigeria lost 195.07 billion to exchange rate movement in 2023. Details indicated that the company recorded a loss per share of N100.26 in 2023, from earnings per share of N61.77 in achieved in financial year 2022.

A review of the financial scorecard showed that the company revenue increased by 22.4% year on year to N547.11 billion, underpinned by sturdy growth across the segments.

The food segment grew revenue by 30% and it accounted for 64.6% of the company’s total revenue while Beverage units grew sales by 10.6%, accounting for 35.4% of aggregate revenue.

Its gross profit settled at N217.171 billion in 2023, representing a more than 39% year-on-year growth from N155.764 billion in the comparable period year in 2022.

Supported by healthy top-line growth in 2023, the company’s gross and operating profit margins grew by 4.8 and 3.2 percentage points to 39.7% and 22.6%, respectively.

Nestle Nigeria Plc reported a pre-tax loss of N104.03 billion in 2023 versus pretax profit of N71.11 billion in 2022 as forex exposure, increase borrowings damaged its earnings performance.

After accounting for a tax credit of N24.55 billion, the loss after tax decreased to N79.47 billion as against N48.97 billion declared as profit in 2022.

In response to the grim financial results, Nestle Nigeria’s management has acknowledged the daunting challenges posed by the harsh operating environment. They have pledged to implement cost-saving measures, streamline operations, and explore opportunities for revenue diversification to steer the company back to profitability.

Despite the setbacks, Nestle Nigeria remains committed to its long-term growth strategy and delivering value to its shareholders. The company continues to invest in product innovation, marketing initiatives, and supply chain optimization to enhance its competitive position in the market and meet the evolving needs of Nigerian consumers.

Industry analysts have attributed Nestle Nigeria’s woes to broader macroeconomic challenges facing the country, including currency volatility, high inflation, and regulatory uncertainties. They warn that unless these underlying issues are addressed, other companies in Nigeria’s corporate landscape could also face similar financial difficulties.

The Nigerian government’s response to the economic challenges, including policy interventions to stimulate growth, improve the business environment, and attract investment, will be crucial in determining the trajectory of companies like Nestle Nigeria and the overall health of the economy.

As Nestle Nigeria navigates through turbulent waters, stakeholders will be closely monitoring the company’s strategic decisions and financial performance, hoping for signs of recovery and stability in the face of adversity.

February 28, 2024