Half year result: Despite 252.5bn loss, Nestle Nigeria sees revenue surge
By Esther Agbo
Nestle Nigeria Plc faced a challenging first half of 2024, recording a pre-tax loss of N252.5 billion, a stark increase from the N69.1 billion loss in H1 2023.
Despite these financial difficulties, the company’s revenue surged by 55 percent, reaching N407 billion, up from N261.8 billion in the same period last year.
The company’s gross profit also showed improvement, growing by 19 per cent to N127.3 billion from N107 billion in H1 2023.
However, the net loss widened significantly to N176.9 billion, representing a 254 percent decrease compared to N49 billion in the previous year, driven by substantial foreign exchange losses and high-interest expenses.
Nestle Nigeria’s net foreign exchange loss soared to N263.7 billion, up from N118.5 billion, reflecting the challenges posed by the devaluation of the Naira.
Despite these losses, the company’s assets increased by 49 percent year-to-date, reaching N869 billion. This rise was largely due to a N150 billion surplus from the revaluation of property, plant, and equipment.
In the second quarter, Nestle Nigeria recorded a revenue of N223.5 billion, a 67 percent increase from N133.8 billion in Q2 2023.
While the company reduced its loss before tax by 40 percent to N56.4 billion, finance costs also decreased by 25 per cent, totaling approximately N99.3 billion. This reduction was partially attributed to a more stable exchange rate during the quarter.
The company reported a significant growth in export revenue, which increased by 656 percent to N2.9 billion from N377 million in H1 2023.
However, despite this positive trend, Nestle Nigeria remains in negative equity, with a 34 per cent increase in negative equity from N78 billion at the end of 2023 to N104.9 billion at the end of H1 2024. Retained losses rose sharply to N255.5 billion, up from N78.6 billion.
Nestle Nigeria’s financial liabilities continue to mount, with a notable increase in interest expenses, which rose to N54.4 billion, a 290 percent jump from N14 billion in the previous year.
The company’s net FX loss on financing amounted to N263 billion, with a substantial portion, N231.8 billion, being unrealised due to the long-term nature of its FX-denominated borrowings.
The company’s total loans and borrowings grew by 62.5 percent, reaching N653.9 billion from N402.3 billion as of the end of 2023.
The increase in borrowings included an intercompany loan of N12.3 billion and a new bank loan of N57 billion, while N77.3 billion was repaid.
Nestle Nigeria’s net FX exposure stands at approximately $449 million, including an intercompany loan of $426.3 million, reflecting the ongoing financial challenges the company faces.
While Nestle Nigeria has demonstrated resilience through revenue growth and asset appreciation, the company continues to navigate a complex landscape of financial pressures, including foreign exchange volatility and rising interest rates.
