By Onome Amuge.
Nestlé Nigeria Plc reported revenue of N261.8 billion in the first half of 2023, representing a 17.7 per cent increase against N222.45 billion generated in the first half of 2022 despite inflationary pressures and a significant increase in finance costs.
The company’s H1 2023 financial results submitted to the Nigerian Exchange Limited, showed that the revenue advancement was supported by growth in both food products and beverages segments to N166.27 billion and N95.50 billion respectively from N132.49 billion and N90.03 billion in the prior year.
The multinational company which is one of the largest in Nigeria’s fast-moving consumer goods (FMCG) industry also recorded an 8.6 per cent year-on-year increase in cost of sales to N154.44 billion in H1 2023 from N142.25 billion in H12022.
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Notably, gross profit was up 33.8 per cent year-on-year to N107.34 billion from N80.21 billion in H12023, while gross profit margin grew to 42.5 per cent in H1 2023 from 37.5 per cent in H1 2022.
In terms of operation costs, Nestlé Nigeria’s operating expenses remained elevated as marketing & administrative expenses materially rose by 42.5 per cent to N39.76 billion in H1 2023 from N27.90bn in H1 2022.The selling & distribution expenses also shot up by 8 per cent to N5.14 billion in H1 2023 from N4.76 billion in H1 2022.
The company’s financial statement also showed a growth of 19.6 per cent in its Depreciation & Amortisation to N5.48 billion from N4.58 billion in H1 2023.
Regardless of the zero-inflow recorded for its Other Income segment, Earnings Before Interest and Tax (EBIT) rose 31.6 per cent year-on-year to N60.80 billion in H1 2023 from N46.18 billion delivered in the first half of 2022.
On the flipside, the company’s bottom line performance was negatively impacted by the exponential rise in its net finance cost to N129.9 billion in H1 2023. This is as net finance income stood at N7.82 billion, a paltry figure in comparison to the high surge of N129.91 billion in its finance expense.
Nestlé attributed the high growth in finance expenses to the devaluation of the Naira as the company reported a net foreign exchange loss of N123.77 billion in H1 2023 from N2.16 billion in H1 2022.
As a result, the company Consequently, suffered a loss before tax of N69.12 billion in H1 2023 compared with a profit before tax of N43.74 billion in the corresponding period of 2022. It also posted a loss after tax of N49.9 billion, a 280 percent decline over the same period in 2022.
Commenting on the results, 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.”
Elhusseini explained that the company’s profit after tax was negatively impacted by the recent devaluation of the Naira, which necessitated the revaluation of its foreign currency obligations.
Going into the second half of the year, he said Nestlé will continue to focus on optimising its operations to ensure the availability and accessibility of nutritious food and beverages as expected from loyal customers.