Nestle Nigeria Record N104 Billion Due to Naira Devaluation

Nestle Nigeria recently announced that its liabilities exceeded its past assets by N78.1 billion in 2023 following the naira's free fall, which affected operations.

The company recorded a loss following its recently released audited accounts, published on Wednesday.

Nestle Nigeria's total liabilities for 2023 accelerated to N659.8 billion from the corresponding year, which settled at N384.8 billion in 2022 following an increase in foreign exchange loss.

Last week, PZ Cussons reported the same losses experienced by the company following a surge in foreign exchange losses following the free fall of the naira. The company's negative net asset was N23.2 billion.

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It was reported that loans denominated in US dollars constituted more than 60% of Nestle Nigeria's total liabilities. Meanwhile, Nestle's debts increased to N402.3 billion from N155.3 billion within a year when converted into local currency.

Nestle Nigeria's net exchange loss after translating foreign currency into naira was N195.1 billion, twenty-two times more than the loss posted a year earlier.

Nestle Nigeria reported a loss before tax to N104 billion. Still, a tax credit in the sum of N24.6 billion from fiscal authorities helped cushion the impact of that expense on the bottom line, cutting the loss after tax to N79.5 billion.

Nestle Nigeria, the local subsidiary of the Swiss-based world's biggest food company, Nestle S.A., found its way into the country one year after independence in 1961 and has been a powerhouse in the consumer goods space with formidable brands such as Milo, Nescafe, Golden Morn, and Maggi among others.

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According to the company's website, brands manufactured and traded internationally total more than 2,000.

Discussing the report released, Mr Wassim Elhusseni, the Chief Executive Office of Nestlé Nigeria, said, 

• I thank every member of our team for their unwavering commitment and dedication, which resulted in strong revenue growth and operating profit vs 2022 despite the challenging economic environment.

• The devaluation of the Nigerian naira in 2023, which led to a revaluation of our foreign currency obligations, undoubtedly impacted our financing costs and consequently our profit after tax. However, we remain optimistic about our capacity to overcome the current economic difficulties and emerge stronger.

• We also remain steadfast in optimising our operations to ensure the availability and accessibility of affordable and nutritious products to our consumers in anticipation of a timely turnaround in the business environment.

However, Nestle Nigeria did not declare dividends for the 2023 financial year.

The current share price of Nestle Nigeria is NGN 990.00. At the close of Wednesday, trading was at 990.00 NGN per share on the Nigerian Stock Exchange (NGX).