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Nestle Nigeria Faces N255 Billion Pre-Tax Loss in Nine Months, Blames Forex Challenges

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Nestle Nigeria Faces N255Billion Pre-Tax Loss

Nestle Nigeria Plc, one of Nigeria’s leading food and beverage companies, has reported a pre-tax loss of N255.38 billion for the first nine months of 2024. The significant loss is primarily attributed to a sharp increase in finance costs, exacerbated by the depreciation of the Naira.

According to the company’s unaudited financial statement released on the Nigerian Exchange (NGX), this marks a staggering 350% increase compared to the pre-tax loss of N56.65 billion reported during the same period in 2023. The report indicates that rising finance costs, particularly those related to foreign currency-denominated debts, have been a major factor in Nestle’s financial woes this year.

Financial Breakdown

Nestle Nigeria’s financial challenges were largely driven by a surge in net finance costs, which soared by 147%, from N148.24 billion in 2023 to N366.22 billion in the current reporting period. This increase was mainly due to foreign exchange translation losses, which rose sharply to N285.29 billion, compared to N127.45 billion in the previous year.

Key highlights of the financial report include:

  • Revenue: N665.28 billion (up 68% year-on-year)
  • Cost of Sales: N458.97 billion (up 94%)
  • Gross Profit: N206.31 billion (up 29%)
  • Operating Profit: N110.84 billion (up 21%)
  • Finance Costs: N369.15 billion (up 136%)
  • Pre-Tax Loss: N255.38 billion (up 350%)
  • Loss After Tax: N184.27 billion (up 328%)

Impact on Earnings

The heavy financial losses have also affected Nestle Nigeria’s earnings per share, which plunged to a negative N232.47 kobo, down by 332% year-on-year. The company’s cost of sales nearly doubled, driven by increased expenses for raw materials and foreign exchange impacts on imported inputs.

In the third quarter alone, Nestle saw its revenue grow from N134.82 billion in Q3 2023 to N258.31 billion in Q3 2024. However, the surge in the cost of sales and net finance costs ensured the company remained in the red, with an after-tax loss of N7.35 billion in the latest quarter.

CEO’s Perspective

The company’s management noted that the significant rise in finance costs, particularly from interest on financial liabilities, rose by 188%, with interest expenses reaching N83.86 billion compared to N29.07 billion in the previous year.

The report also highlights the impact of currency volatility on the company’s bottom line, noting that foreign exchange losses continue to erode profitability. Nestle Nigeria has emphasized its commitment to managing these macroeconomic challenges while exploring strategies to optimize costs and improve operational efficiency.

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