Nestle’s profit dips 13% amid economic disruption
… to pay shareholders N25 per 50 kobo ordinary share as interim dividend
Nestlé Nigeria with a strong portfolio has been on top of its game for many years and has maintained a profile of continued growth in revenue and profits successfully managing economic headwinds.
The outbreak of the coronavirus pandemic which fuelled economic and commercial disruption as well as the challenging operating business environment took a toll on the company’s financial record as it recorded marginal increase in revenue and decline in profit.
BusinessDay analysis of Nestlé’s financials for the nine months period ended September 30, 2020 showed that the company during this period, recorded revenue worth N212 billion, which was a minimal one percent, increase from the N211 billion recorded in the same period of 2019.
The bulk of revenue within the period was gotten from the sale of its goods in Nigeria which contributed N208.72 billion while its export proceeds contributed N4 billion to its revenue.
Further analysis of its financials amid the outbreak of the coronavirus pandemic which disrupted economic and commercial activities as well as other inherent challenges in the business environment showed that its profit activities took an unexpected turn as it declined significantly.
The company’s gross profit dropped by seven percent from N96 billion in 2019 to N90 billion in 2020. Its profit before tax during this period fell by 13 percent dropping to N49.26 billion in 2020 from N56.55 billion in 2019.
With an after tax deduction of N17.32 billion, its total profit for the period declined by 13 percent to N31.93 billion in 2020 as against the N36.84 billion realized in the corresponding period of 2019.
Nestlé’s total equity declined by 26 percent to N41.8 billion from N56.5 billion in the previous year, however its share capital remained the same having N396 million in 2020 and 2019.
Despite the drop in its accumulated profit, the consumer goods giant proceeded to pay off an interim dividend of N25 per 50 kobo ordinary share to its shareholders. After declaring a dividend of N35.66 billion in 2020, which is 17 percent higher than N30.5 billion stated in the same period of 2019.
At the close of market on Friday, the company’s stocks increased by 4.45 percent reaching a six months high of N1350 per share price despite investor sentiments trailing the Fast Moving Consumer Goods industry (FMCG), proving good value for investment in a depressed stock market.
Nestlé Nigeria, a giant in the Fast Moving Consumer Goods Industry (FMCG) is one of the world’s largest food and Beverage Company with its headquarters in Switzerland, while it operates in over 190 countries. The company commenced operations in Nigeria in 1961 and was listed on the nation’s bourse in 1979. The principal activities of the company include manufacturing, marketing and distribution of food products including purified water throughout the country. The Company also exports some of its products to other countries within and outside Africa.