Naira devaluation pushes Nestle to first loss in 12 years

Nestle Nigeria Plc, a food manufacturing and marketing company, has reported its first after-tax loss for the first time in 12 years largely on the back of the naira devaluation.

According to the company’s latest financial statement, it posted an after-tax loss of N79.47 billion last year compared to a profit of N48.97 billion in 2022.

The manufacturer also saw a sharp decline in its shareholder funds which stood at a negative of N78 billion compared to a positive of N30.2 billion.

“The devaluation of the naira in 2023 which led to a revaluation of our foreign currency obligations undoubtedly impacted our financing cost and consequently the profit after tax. However, we remain optimistic about our capacity to overcome the current economic difficulties and emerge stronger,” Wassim Elhusseini, managing director and CEO of Nestlé Nigeria Plc, said in a statement.

This development follows other manufacturers such as Guinness Nigeria, PZ Cussons, Nigeria Breweries and Cadbury Nigeria which reported losses last year.

The Central Bank of Nigeria in June merged all segments of the FX market into the Investors and Exporters window and reintroduced the willing buyer, willing seller model.

The naira has continued to depreciate against the dollar and other major foreign currencies since then.

The liberalisation of the foreign exchange regime weakened the naira from 463.38/$ to 889.86/$ as of December 15 last year. At the parallel market, the naira depreciated to 1,186/$ from 762/$.

Further analysis of Nestle’s financial statement showed that net finance cost surged to N227.8 billion last year from N16.3 billion in 2022.

Despite challenges, the company saw an increase in revenue to N547.12 billion from N446.82 billion, although export sales declined to N1.18 billion from N3.41 billion.

The company recorded a positive net cash from/ (used in) operating activities of N82.70 billion from a negative of N4.43 billion.

Net cash used in investing activities recorded a negative of N55.11 billion from a negative of N22.87 billion and net cash provided by financing activities declined to N21.29 billion from N44.24 billion.

At the end of the period, cash and cash equivalents stood at N167.81 billion, up from N117.98 billion.

“Looking ahead, we remain dedicated to our purpose of unlocking the power of food through responsible local sourcing and confection of the high-quality nutritious food and beverages that families across Nigeria prefer. We also remain steadfast in optimising our operations to ensure the availability and accessibility of affordable and nutritious products to our consumers in anticipation of a timely turnaround in the business environment,” Elhusseini added.