Nestlé Nigeria Plc has reported a loss before tax (LBT) of N221.589 billion for the financial year ended December 31, 2024, representing a 113% year-on-year (YoY) increase from 2023.
The company attributed the loss to rising finance costs, largely driven by the devaluation of the Naira.
However, Nestlé bounced back in Q4 2024, posting a profit after tax of N19.676 billion, a sharp recovery from the N36.406 billion loss recorded in Q4 2023.
Also, Nestlé’s revenue grew significantly in 2024. According to the audited financial statements reviewed by Nairametrics, the company’s full-year revenue surged by 75.25% YoY to N958.815 billion, driven by strong domestic sales.
While domestic sales continued to dominate revenue, export sales increased to N6.6 billion in 2024, compared to N1.2 billion in 2023.
Key highlights (2024 vs 2023 FY)
- Revenue: N958.815 billion +75.25% YoY
- Cost of sales: N652.460 billion +97.75% YoY
- Gross profit: N306.355 billion +41.06% YoY
- Marketing & distribution expenses: N106.852 +44.82%
- Administrative expenses: N32.530 billion +58.34% YoY
- Operating profit: N167.876 billion +35.62% YoY
- Finance cost: N392.832 billion +68.23% YoY
- Loss after tax: N164.595 billion +107.11% YoY
- Loss per share: N207.65 +107.11% YoY
- Cash and cash equivalents: N22.642 billion -86.50% YoY
- Total assets: N858.698 billion +47.60% YoY
- Total borrowing: N653.702 billion +62.48% YoY
- Shareholders’ funds: -N92.290 billion +18.27% YoY
CEO’s Statement
Commenting on the results, Nestlé Nigeria’s CEO, Wassim Elhusseini, acknowledged the impact of economic challenges on the company’s financials, particularly the high finance costs from foreign exchange revaluation losses.
“Our 2024 results demonstrate the resilience of our brands and teams despite the tough business environment. The impressive 75.2% revenue growth and 35.6% increase in operating profit to N167.9 billion highlight our strong operating performance,” Elhusseini said.
He also noted that the company’s return to profitability in Q4 2024 was a key achievement, as Nestlé recorded a net profit of N19.7 billion, reversing the N36.4 billion loss in Q4 2023.
Nestlé Nigeria invested N132 billion in operations since 2023, including N72 billion in 2024, to expand its market position and meet consumer demand. The company also grew its workforce by 8% to support expansion efforts.
Other highlights of the results
- While revenue showed robust growth, cost of sales outpaced revenue growth, rising 97.75% YoY to N652.460 billion, reducing gross profit margins. This suggests higher input costs, currency fluctuations, and inflationary pressures impacted production expenses.
- Despite these challenges, gross profit increased by 41.06% to N306.355 billion.
- However, operating profit growth lagged at 35.62%, reaching N167.876 billion, due to increased marketing, distribution, and administrative costs.
The impact of rising finance costs
One of the most critical financial challenges for Nestlé Nigeria in 2024 was the sharp rise in finance costs, which surged 68.23% YoY to N392.832 billion.
This figure significantly exceeded operating profit, making it the primary factor behind the company’s full-year loss.
The rise in finance costs was driven by:
- Foreign exchange losses from revaluation of Nestlé Nigeria’s foreign currency obligations.
- Increased borrowing, as total debt rose 62.48% YoY to N653.702 billion, leading to a 165% surge in interest expenses. As a result, the interest coverage ratio contracted to 1.64, down from 3.22 in 2023.
Consequently, loss after tax for the year widened to N164.595 billion, marking a 107.11% increase from 2023. The loss translated into a loss per share of N207.65.
Liquidity and financial position
Nestlé Nigeria’s financial position weakened significantly, with cash and cash equivalents plunging 86.50% YoY to N22.642 billion, reflecting reduced liquidity.
This decline raises concerns over the company’s ability to manage short-term obligations, especially amid rising borrowing costs.
Total assets increased by 47.60% YoY to N858.698 billion, indicating growth in investments and business expansion.
However, shareholders’ funds stood at a negative N92.290 billion, reflecting accumulated losses and pressure on equity.
Key takeaways
- Revenue surged by 75.25% YoY, but cost of sales outpaced revenue growth, impacting margins.
- Finance costs (+68.23% YoY) were the main driver of Nestlé’s full-year loss.
- Q4 2024 marked a return to profitability with N19.676 billion in profit after tax.
- Liquidity concerns remain as cash balances dropped 86.50% YoY.
- Debt levels increased sharply (+62.48% YoY), adding pressure to future financial stability.
Nestlé Nigeria enters 2025 at a critical juncture, where cutting finance costs, strengthening liquidity, and sustaining revenue growth will be crucial for long-term profitability.
Its stock closed at N975.00 per share on Wednesday, February 26, 2025, gaining 11.4% in value. Despite the recent rebound, it ranks 51st in year-to-date performance after losing 20.5% of its value in 2024.
