Nestle Nigeria Lose N127.46 Billion in Foreign Exchange

Nestle Nigeria recently released its foreign exchange for the first nine months of 2023, and it shows that the firm recorded a loss of N127.46 billion, far from the corresponding year that settled at N1.69 billion in 2022. This development pushed the company to a loss after tax, resulting in a loss per share for its shareholders.

Due to the FX loss, Nestle Nigeria recorded a loss after tax of N43.07 in the first nine months of 2023 when compared to the corresponding year, which was N40.15 billion in 2022—this led to a loss per share of N54.33 per share from earnings per share of N50.66 per share.

Net cash flows from operating activities increased to N53.26 billion in the first nine months of 2023 compared to the corresponding year, which was N4.34 billion in 2022. 

Nestle Nigeria's revenue increased as it settled at N396.59 billion in the first nine months of 2023 compared to the corresponding year, which was N333.47 billion in 2022.

Nestle Nigeria's total goods sold for the first nine months of 2023 were N396.1 billion in Nigeria, while N488.02 million worth of goods were exported during the period.

Other Analysis

Nestle Nigeria's marketing and distribution expenses rose to N58.88 billion in the first nine months of 2023 compared to the corresponding year, which settled at N43.38 billion in 2022.

Nestle Nigeria's administrative expenses increased to N9.7 billion in the first nine months of 2023 compared to the corresponding year, which settled at N9.03 billion in 2022.

Nestle Nigeria's marketing and cost of sales rose to N236.42 billion in the first nine months of 2023 compared to the corresponding year, which settled at N216.19 billion in 2022.

Nestle Nigeria's finance costs rose to N26.65 billion in the first nine months of 2023 compared to the corresponding year, which settled at N6.49 billion in 2022.

Nestle Nigeria's net cash flows from investing activities rose to N26.65 billion in the first nine months of 2023 compared to the corresponding year, which settled at N12.02 billion in 2022.

Nestle Nigeria's interest income on securities and bank deposits rose to N3.7 billion in the first nine months of 2023 compared to the corresponding year, which settled at N1.98 billion in 2022.

Nestle Nigeria's cash and cash equivalents rose to N152.27 billion in the first nine months of 2023 compared to the corresponding year, which settled at N107.13 billion in 2022.

Reactions From Analyst

• Operating expenses (adjusted for depreciation) remained elevated, exacerbated by the growths of 35.98 percent and 4.97 percent year on year to N58.03 billion and N7.99 billion in 9M 2023 in its marketing and administrative expenses (adjusted for depreciation) and selling and distribution Expenses (adjusted for depreciation) respectively.

• Despite the company’s ability to source most of its raw materials locally, the cost of sales (adjusted for depreciation) yielded to inflation and FX pressures as it advanced by 9.36 percent year on year to N236.42 billion in 9M’2023 from N216.19 billion in 9M’2022.

Back Story

Gbenga Oyebode was appointed the new chairman of its board of directors after the retirement of David Ifezulike as chairman of the board. This appointment was effective May 18, 2023.

Nestle Nigeria is located in Lagos, Nigeria, and is a publicly listed food and beverage company. It is mainly owned by a holding company based in Switzerland and has ties to the Tolaram Group. The company was founded in 1961 and conducted trading under Nestle Products Nigeria Limited.