Nestle Nigeria’s Net Loss Rises 328% to 184 Billion

Nestle Nigeria Plc reported a staggering 328% increase in net loss year-on-year, reaching N184 billion in the first nine months of 2024, up from N43.068 billion recorded in the same period last year. The company’s unaudited financials, published for the nine months ending September 2024, highlighted significant financial strain, particularly from foreign exchange (FX) losses, which amounted to N285.29 billion.

Despite revenue rising by 67.8% year-on-year to N665.29 billion, compared to N396.592 billion in 2023, the firm faced mounting challenges. This revenue growth was mainly attributed to a 66.8% increase in domestic sales and a remarkable 861.7% surge in exports, driven by the launch of new products such as Maggi Signature Jollof, Maggi Soya Chunks, Nido Milk and Soya, Milo 3-in-1, and Cerelac Rice.

According to analysts, Nestle Nigeria’s revenue boost reflects volume growth, strategic price adjustments, and the introduction of these innovative products, catering to evolving consumer demand. However, the increased topline was offset by a sharp rise in costs.

The company’s cost of sales soared by 94.1% year-on-year to N458.978 billion, up from N236.421 billion in 2023. This surge in costs was largely attributed to inflationary pressures that drove up raw material expenses. Consequently, while gross profit rose by 28.8% to N206.312 billion from N160.171 billion, the gross profit margin declined, settling at 31.0% from 40.4% in the prior year.

Operating expenses also saw a considerable hike, up by 39.8% due to elevated marketing and administrative expenditures. Nestle’s operating profit showed a modest gain, rising by 21% to N110.844 billion from N91.586 billion in 2023. However, the operating profit margin dropped to 16.7% from 23.1% as the company struggled with rising costs.

Finance costs further eroded profitability, with net finance costs up by a substantial 147.0% year-on-year, reaching N366.23 billion from N148.24 billion in the previous year. The breakdown revealed a finance income drop to N2.93 billion from N8.29 billion, largely due to reduced near-cash financial instruments and time deposits. Meanwhile, finance costs jumped by 135.8% to N369.16 billion, stemming from the net exchange loss on foreign currency translations, which escalated to N285.29 billion from N127.46 billion in 2023.

Interest expenses also surged, marking a 188.5% increase to N83.87 billion from N29.07 billion, reflecting the impact of currency devaluation and increased intercompany loans. Nestle’s unrealised FX loss further ballooned, reaching N251.59 billion, up from N173.93 billion last year.

However, Nestle recorded a tax credit of N71.11 billion during the period, attributed to the reversal of temporary differences in deferred taxes. This measure provided some relief to the company’s bottom line but did not offset the overall loss, resulting in a negative Profit After Tax (PAT) of N184.27 billion for the period.

This financial performance underscores the complex challenges Nestle Nigeria faces amid rising inflation, currency devaluation, and foreign exchange volatility impacting its operations and financial stability. IIF and Kuramo Capital Launch Fund to Support MSME Financing