Nestle Nigeria’s profit plunge to 3-year low on higher cost
...pays shareholders N35.50
Nestle Nigeria Plc, one of Nigeria’s fastmoving consumer goods firms has seen its profit slump to its lowest in three years in 2020 as higher sales cost and finance cost weakened profit.
The firm’s profit after tax plunged 14 percent to N39.2 billion in 2020 from N45.6 billion in 2019.
Revenue grew by just 1 percent to N287 billion in 2020 but the sales cost rose faster. Cost of sales rose by 7.7 percent to N167.8 billion in 2020 compared to N155.7 billion in the previous year.
This dragged gross profit down by 6.9 percent, to N119.2 billion in 2020 from N 128.1 billion a year before.
The firm could not deleverage in 2020 as borrowing cost soared 95 percent to N4.42 billion from N2.26 billion in the previous year.
Finance cost also plunged to N646.5 million compared to N1.32 billion a year before.
Although the consumer goods maker spent less on marketing and distribution as the expense dropped by 4.7 percent to N43.8 billion compared to N46 billion in 2019. However, administrative expense declined 9 percent from the previous year.
Profit before tax dropped 15 percent to N60.6 billion in 2020 from N71.1 billion in 2019. The firm’s income tax expense dropped to N21.4 billion, down from N25.4 billion in the year before.
Other income rose 2.3 percent to N66.9 billion in 2020 compared to N65.3 billion recorded in the same period of 2019.
Earnings per share (EPS) plunged 14.2 percent to N49.4 per share from N57.6 per share in 2019.
The directors of Nestle propose a final dividend of N35.50 in 2020 compared to 2019 when a dividend of N45 per share was proposed. The 2020 dividend comprise of N24.50k from the profit after tax for the year ended 31 December 2020, N5.00 and N6.00 from the after tax retained earnings for the year ended 31 December 2019 and 31 December 2018 respectively.
Nestle joined forces with the federal and state governments to help the response efforts and those in need through both financial contributions and donation of food and beverages. The firm contributed over N700 million comprising donation of food and beverages worth N450 million, and N250 million in cash.
Nestle sells foods and beverages. The Food segment includes production and sale of Maggi, Cerelac, Nutrend, Nan, Lactogen and Golden Morn while the Beverages segment includes production and sale of Milo, Chocomilo, Nido, Nescafe and Nestle Pure Life.