Nestle Nigeria Plc reported a pre-tax loss of N86.5 billion in the second quarter of the year ended June 30, 2023.
The losses contributed to wiping its first quarter its half-year profits to N61.6 billion one of the worst performance in years. Nestle Nigeria’s losses are mainly due to a forex loss of N123.7 billion which impacted its profits.
The impact of the losses essentially wiped out Nestle’s retained earnings which could impact its ability to pay dividends this year if it is not able to address the issues. Its net assets are also wiped out in one fell swoop as a result of the forex losses. Nestle had a net asset of N46.4 billion as of the first quarter of the year.
Commenting on the results, Mr. Wassim Elhusseini, Managing Director and CEO of Nestlé Nigeria PLC, said, “I thank every member of our team for the unwavering commitment and dedication which resulted in the significant increase in revenue and gross profit over H1 2022 despite the challenging business environment. Our profit after tax was, however, negatively impacted by the recent devaluation of the Naira, which necessitated the revaluation of our foreign currency obligations. Going into the second half of the year, we will continue to focus on optimising our operations to ensure the availability and accessibility of the nutritious food and beverages our loyal customers expect from us.“
Nestle has an intra-group loan of $454 million which may have contributed to the forex losses the company experienced. Nestle might at this rate either raise capital to close the negative equity or convert some of the loans to equity or expect succor from forex appreciation.
Nestlé Nigeria: Nestlé Nigeria is one of the largest food and beverage companies in Africa. For over 59 years, the company has been delighting consumers around Nigeria by consistently delivering high quality nutritious food. With a staff strength of over 2,200 direct employees, 3 manufacturing sites, 7 branch offices and a head office located in Lagos, the company produces and markets several iconic brands including NESTLÉ PURELIFE, GOLDEN MORN, MILO, MAGGI and NESCAFÉ. Nestlé’s purpose is to unlock the power of food to enhance quality of life for everyone today and for generations to come.
