Nestle Grows Profit by 30% to N21bn on Lower Financing Cost

Nestle Nigeria Plc has reported improved financial results for the half year ended June 30, 2018.

While top-line rose by 10.9 per cent, bottom-line grew faster by 30 per cent, following a significant decline in net financing cost.

An analysis of the performance showed that Nestle posted a revenue of N135.295 billion in 2018, up from N121.919 billion. Its cost of sales stood at N79.718 billion as against N73.579 billion in 2017. Gross profit was N55.577 billion, up from N48.343 billion.

Market and distribution expenses also increased from N16.863 billion to N19.031 billion, while administrative expenses reduced to N4.393 billion, from N4.781 billion. Net financing cost fell by 87 per cent from N2.239 billion to N281 million.

Nestle ended the period with profit before tax (PBT) of N31.873 billion, up from N24.459 billion, while profit after tax (PAT) improved from N16.547 billion to N21.458 billion, showing an increase of 30 per cent compared with N16.548 billion in 2017.

Commenting on the results, the company said, “We are pleased with the sustained growth of our company amid the tough competitive business landscape. These results were possible due to the relentless efforts of our highly passionate team to provide high quality and affordable nutritious food and beverages to Nigerian consumers.” It promised to maintain the focus on delighting consumers with its nutritionally superior products by increasing promotion initiatives and providing more nutrition education.

“In line with our creating shared value principle, we remain committed to building thriving and resilient communities through local sourcing, expanding the commercialisation of our products and strengthening our value chain,” it said.

Market operators said with the improved results, shareholders should expect higher dividends at the end of the year. Nestle paid N33.678 billion dividend in 2017 financial year, which translated to N42.50 per share.

The Chairman of Nestle Nigeria, Mr. David Ifezulike, had last May told shareholders that the dividend payment was in line with the company’s policy of making its shareholders the ultimate beneficiaries of business growth. According to him, in 2017, Nestle brands remained the leaders in their categories by increasing the focus of the marketing efforts on driving penetration through the popularly positioned products(PPP) strategy and continuing to educate consumers on the benefits of good nutrition delivered by the high quality products.