…Gross margin narrowed (-860bps y/y) to 30.6% in Q3-24 (Q3-23: 39.2%) following significant cost pressures (+118.7% y/y) in the period
…NESTLE reported a pre-tax loss of N2.86 billion in Q3-24 (vs PBT of N12.46 billion in Q3-23), impacted by the devaluation of Naira
TUE OCT 29 2024-theGBJournal| Nestle Nigeria Plc saw robust 91.6% y/y increase in revenue to N665.3 billion in its Q3-24 unaudited results as export sales reached N1.8 billion (vs N0.1 billion in July-Sep 2023).
The growth in revenue was fueled by substantial growth in both the Food (+85.7% y/y | 63.3% of revenue) and Beverages (+102.8% y/y | 36.7% of revenue) segments.
On a quarter-on-quarter basis, revenue grew by 15.6%, supported by moderate expansion in the Food (+13.9% q/q) and Beverage (+18.6% q/q) segments.
Operating profit rose 54% to N47.3 billion in the period under review from N30.8 in July-Sep 2023
Management attributed this strong performance to positive volume growth and higher pricing, with gains also stemming from new product introductions.
”The results from the first nine months of 2024 reflects a strong growth momentum in a challenging business environment,” said Mr. Wassim Elhusseini, the CEO/Managing Director of Nestle Nigeria Plc.
”Particularly noteworthy is our steady improvement in the gross and operating profit quarter on quarter. Delivering these results has involved robust margin management initiatives, strong actions on forex management front and successful execution of our business plans,” Elhusseini adds.
On pricing, channel checks reveal that NESTLE implemented average prices increase of c. 31.3% q/q across their product portfolio.
Gross margin narrowed (-860bps y/y) to 30.6% in Q3-24 (Q3-23: 39.2%) following significant cost pressures (+118.7% y/y) in the period.
Similar to previous quarters, the elevated costs reflects the impact of high inflationary pressures, notably in raw material expenses (+114.9% y/y) and overhead costs (+73.0% y/y).
As a result, both EBITDA (-403bps y/y) and EBIT (-435bps y/y) margins dipped to 21.1% and 18.5%, respectively, due to a 43.5% y/y increase in operating expenses.
In addition, net finance cost saw a substantial increase of 176.1% y/y to N50.62 billion in the quarter, owing to the notable rise in finance costs (+171.5% y/y) in the period.
The higher finance costs stemmed from the increase in interest expenses on financial liabilities (+95.0% y/y) and net foreign exchange loss (+140.3% y/y to N21.58 billion), reflecting both the impact of the elevated interest rate environment and naira devaluation.
Overall, NESTLE reported a pre-tax loss of N2.86 billion in Q3-24 (vs PBT of N12.46 billion in Q3-23), impacted by the devaluation of Naira.
Following a tax expense of N4.50 billion (+18.9% y/y), the loss after tax settled at N7.36 billion (vs PAT of N6.91 billion in Q3-23).
Meanwhile, NESTLE Nigeria reported a Q3-24 standalone loss per share of N9.28 (vs EPS of N8.72 in Q3-23).
This decline was mainly driven by a sharp increase in the cost of sales (+118.7% y/y) and a significant rise in net finance costs (+176.1% y/y). As a result, the company’s loss per share rose to N232.47 in 9M-24 (9M-23: N54.33).
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