Soaring finance cost puts a squeeze on Nestle Nigeria’s Q1 profit

Nestle Nigeria Plc, reported its first quarter results for 2018 on Friday, with the food and beverage company posting a net profit of ₦8.6bn, from ₦8.4bn in the previous year, a nearly 3% increase.

The company blamed the nearly flat rise in earnings on rising finance cost which includes interest expense and foreign exchange loss. Finance charge grew 182% to ₦879 million.

The company noted in its first quarter financial report that it took a ₦3.4bn impairment charge on its new bottled water factory in Abaji, Abuja citing failure to realise growth and market gain from the facility which was commissioned in 2016.

Despite the disappointing earning result, the company reported a 10% growth in revenue to ₦67.5bn from ₦61bn in 2017.

Beverage products segment contributed ₦24.4bn or 36.15% of the total revenue, having risen from ₦20.2bn in the previous year. Beverage products include Milo, Chocomilo, Nido, Nescafe and Nestle Pure Life.

Food products segment contributed the remaining ₦43bn or 63.7% of the company’s total revenue for the quarter, having grown from ₦40.2bn in the previous year. The food items include Maggi, Cerelac, Nutrend, Nan, Lactogen and Golden Morn.

Commenting on the results, Nestle said that “The Company continued to focus on demand creation activities for its existing and the new products launched in recent months. These include Nestlé MILO RTD, MAGGI Naija Pot and the new GOLDEN MORN Puffs.

“We are pleased with the sustained growth of our Company amid the competitive environment. Sustained focus on creating value for our consumers and increased efficiency in our operations also contributed to our results. We continued to invest in our most important asset, our people, as well as in product innovation to delight consumers.”

Looking forward to the rest of 2018, the firm said “We are optimistic that our current business model will keep on delivering satisfactory results to our shareholders and to society in line with our Creating Shared Value principle. Providing high-quality and affordable nutritious food and beverages which meet the needs and preferences of our consumers will remain in focus as we work alongside partners to build thriving and resilient communities through sustainable local sourcing and product innovation.”

Updated: 4 May 2018  3:50 PM

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