Nestle Nigeria Cuts Dividend as Profit Declines 66% to N7.6bn
Nestle Nigeria Plc yesterday announced its audited results for the year ended December 31, 2017 , showing the negative impact of tough macroeconomic environment. While the company grew its top line, bottom line declined by about 67 per cent.
Specifically, Nestle Nigeria recorded a revenue of N181.911 billion, up by 20.2 per cent from N151.272 billion recorded in 2015. Cost of sales rose by 27 per cent from N83.926 billion to N106.583 billion. Gross profit stood at N75.328 billion, up by 11.8 per cent from N67.346 billion recorded in 2015. Marketing and distribution expenses grew by 11 per cent from N25.905 billion to N28.775 billion, while administration expenses rose by 8.3 per cent from N7.694 billion to N8.339 billion, resulting in an operating profit of N38.213 billion, up by 13.2 per cent from N33.747 billion in 2015.
However, net finance cost soared 276.6 per cent from N4.425 billion to N16.665 billion in 2016. Consequently, profit before tax (PBT) fell by 26.51 per cent to N21.548 billion, compared to N29.322 billion in 2015. A higher growth in income tax expenses by 143 per cent, contributed to depress profit after tax by 66.6 per cent from N23.737 billion in 2015 to N7.925 billion in 2016.
The lower bottom line notwithstanding, the directors have recommended a dividend of N10.00 per share, down, however, from N29.00 paid the previous year.
Commenting on the results, the directors said revenue grew by 20 per cent in spite of the challenging operating environment and softer consumer demand due to rising inflation.
“This is a confirmation that our brands continue to enjoy strong patronage as they enable our loyal consumers to live happier and healthier lives. Notwithstanding the increase in the cost of sales and operating expenses due to rising input costs and currency devaluation, operating profit increased by 13 per cen. This was made possible through internal cost savings initiatives, 0peratign efficiency and pricing management,” they said.
However, the directors added that the PAT was negatively impacted both by revaluation of foreign loans resulting from the devaluation of the naira and higher income tax provision due to expiration of the pioneer status.