Nestle Nigeria’s after-tax loss widens 254% on naira devaluation

Nestle Nigeria has recorded an after-tax loss of N176.9 billion in the first half of 2024, driven by the devaluation of the naira.

The firm’s after-tax loss widened by 254.51 percent from the N49.9 billion recorded in H1 2023. “The devaluation of naira led to the revaluation of our foreign currency obligations and had an adverse impact on the profit after tax, resulting in a net loss of N176.9 billion for the first half of the year,” it said in a statement.

An analysis of its financial results revealed that its cost of sales increased to N279.7 billion in H1 2024 from N154.4 billion in H1 2023. Nestle Nigeria’s half-year revenue grew to N406.9 billion from N261.8 billion.

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“The results from the first half of 2024 reflect a clear growth momentum despite continued challenges in the business environment. Particularly noteworthy is our second quarter performance with a 67 percent increase in sales year-on-year, underscoring the strength of our brands and the trust our consumers place in us,” Wassim Elhusseini, chief executive officer/managing director of Nestle Nigeria, said.

“Delivering these results has involved optimising operational efficiencies and, more importantly, the hard work and dedication of our employees, who have been crucial to this success. We also appreciate the unwavering support of our business partners and shareholders.

“We are confident in our ability to navigate the current challenges to deliver long-term value to our shareholders while contributing positively to our communities. Our commitment to excellence and innovation will continue to guide us as we strive to meet and exceed the expectations of our stakeholders,” he added.

Between April and June 2024, Nestlé Nigeria Plc’s sales grew 149.05 percent to N223.4 billion from N89.7 billion.

“Further, the devaluation of the naira led to the revaluation of our foreign currency obligations and had an adverse impact on the profit after tax resulting in a net loss of N34.2 billion versus N66.1 billion in Apr – Jun 2023,” Nestle Nigeria said.

Analysts at Cordros Securities said in a statement that Nestle’s topline performance remained strong in Q2 2024, but increased costs offset the gains.

“For the rest of the year, we anticipate continued topline growth driven by price increases across product categories, the launch of innovative and affordable products, and enhanced distribution reach, which should boost volumes,” they forecasted.

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“On the higher costs, the company plans to reduce production costs through energy efficiency measures and by substituting imported inputs with local content. However, despite these efforts, we expect elevated cost pressures and foreign exchange losses already incurred to impact NESTLE’s 2024 full-year earnings,” Cordros Securities analysts added.

Nestle Nigeria Plc is a publicly listed food and beverage specialty company headquartered in Lagos. It is majorly owned by a holding company based in Switzerland and has ties to the Tolaram Group. The company was founded in 1961 and traded under the name Nestle Products Nigeria Limited.