Nestle Nigeria Plc has reported a 328% year-on-year surge in net losses for the nine months ending in 2024, with losses climbing from N43.068 billion to a staggering N184 billion.
This increase is attributed to significant foreign exchange losses and heightened operating expenses, according to the company’s unaudited financial statements.
The report highlights an overwhelming N285.29 billion loss tied to foreign exchange issues, overshadowing Nestle Nigeria’s impressive 67.8% revenue growth, which rose to N665.29 billion from N396.592 billion recorded in the same period last year. Key drivers of this topline growth included a 66.8% rise in domestic sales and an 861.7% spike in exports, spurred by the introduction of new products such as Maggi Signature Jollof, Milo 3-in-1, and Cerelac Rice.
However, Nestle’s cost of sales nearly doubled, escalating by 94.1% to reach N458.978 billion. This surge, driven by inflationary pressures and rising raw material costs, has impacted the company’s profit margins. Although gross profits improved by 28.8% to N206.312 billion, gross margin slipped to 31.0%, down from 40.4% in 2023.
Operating expenses also grew significantly, rising 39.8% due to increased marketing and administrative spending. Consequently, the operating profit margin fell from 23.1% to 16.7%, though the operating profit itself rose by 21% year-on-year to N110.844 billion.
The financial report points to soaring finance costs, which increased by 147% to N366.23 billion, largely due to a 135.8% rise in finance expenses, reaching N369.16 billion. These expenses include a net exchange loss on foreign currency denominated balances, which surged to N285.29 billion. Additionally, the company faced a 188.5% jump in interest expenses due to currency devaluation and increased intercompany loans.
On a brighter note, Nestle benefited from a tax credit of N71.11 billion through the reversal of deferred tax liabilities. Despite this, the company closed the nine-month period with a negative profit after tax (PAT) of N184.27 billion, underscoring the impact of Nigeria’s currency devaluation on multinational companies and the ongoing economic challenges.
