Half year (H1) results of Nestle Nigeria Plc, a unit of the world’s biggest food company, reveals that profit after tax (PAT) grew by 30 percent to N21.5 billion in H1 2018 from N16.5 billion in H1 2017. BusinessDay analysis shows that the relatively stable exchange rate environment witnessed in the first half of the year 2018 in Nigeria has impacted significantly on the earnings growth of Nestle Nigeria Plc.
A critical look into its financials discloses that the first half of 2018 has been a good half so far for the company.
As a result of the stable value of Naira against the US dollars, the company was able to cut down heavily on its Net foreign exchange loss by 99 percent during the period. As at H1 2017, Net foreign exchange loss stood at N5.17 billion, however, in H1 2018, net foreign exchange loss was as low as N50.19 million.
Interest expenses on financial liabilities and finance expenses also declined by 52 percent and 85 percent respectively. Analysis reveals that Nestle reduced levels of borrowing from financial institution and intercompany loans.
Excluding the impact of foreign exchange differences, the company borrowed less from companies within the sector. Intercompany loans amounted to approximately N485 million which represents a decline of about 65 percent from initial intercompany loan of N1.37 billion recorded in H1 2017.
The largest listed consumer goods firm also grew its revenue in H1 2018 by 11 percent to approximately N135.3 billion from N121.9 billion in H1 2017. Nestle Nigeria is about 64 percent owned by Switzerland’s Vevey-based Nestle SA.
The company makes Maggi cube seasoning and Milo cocoa as demand for packaged foods grow in Africa’s largest economy. Nestle Nigeria stock is up 51 percent in the past year.
DAVID IBIDAPO & OMOBOLA ADU
