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Nestlé S.A pays N748m for additional 636,384 units of Nestlé Nigeria

Nestle, Flour Mills buck the trend as industry brace for tough times

Nestlé S. A., the ultimate parent company of Nestlé Nigeria Plc has increased its equity stake in the company with the purchase of additional 636,384 units. Nestlé Nigeria Plc is one of Nigeria’s largest food and beverage companies. The share dealing by the company’s insider done on the Nigerian Bourse on August 20 was at N1, 174.67 per share, cumulatively valued at N747.54million.

Apart from Nestlé S.A, Switzerland, with 524,559,457 ordinary shares (representing 66.18percent) and Stanbic IBTC Nominees Limited with 7.22percent, no other shareholder held 5percent or more of the paid-up capital of the Company as at June 30, 2020.

Nestlé S.A. is a Swiss multinational food and drink processing conglomerate corporation headquartered in Vevey, Vaud, Switzerland. It is the largest food company in the world, measured by revenues and other metrics.

Nestlé has been in operation in Nigeria since 1961 in the Food and Beverage Segments. The company produces and markets global brands including market leading Maggi seasoning cube, Milo and Nestle Pure Life Water.

Nestlé Nigeria recently released its half year (H1) results, reporting a flat topline performance. H1’20 revenue came flat at N141 billion, same compared to the preceding H1’19 period.

While food revenue continued to underperform this year (-2.5percent year-on-year (y/y) to N86 billion in H1’20), the revenue growth in beverages (+2.5percent y/y to N55 billion) acted as a buffer, likely boosted by Ramadan demand in second-quarter (Q2).

Amid pandemic-induced inflationary pressures, Nestlé Nigeria gross profit moderated 7.9percent in H1’20 to N60.8 billion; while after tax profit for the period printed lower at N21.8billion from H1’19 high of N26.2billion.

United Capital Research analysts who adjusted some of their expectation for the rest of the year in line with the new realities in the macro-economic environment had on August 4 asked investors to “buy” Nestlé Nigeria Plc shares at their review target price (TP) of N1, 343.2.

“Adjusting our model estimates with the new assumptions, we review our year-end target price to N1,343.2/share. The stock currently trades at a market price of N1,175/share, a 14.3percent discount to our year-end Target Price. We maintain our BUY rating on the Ticker”, the analysts had said. The stock closed trading week ended Friday August 21 at N1,175.

Meanwhile, Vetiva research analysts had asked investors to “sell” Nestlé Nigeria saying that their target price for the stock is N1,078.08.