Nestle Nigeria, on Friday morning excited traders and investors with its half-year earnings report ended June 30, 2017, indicating that net profit growth was far stronger at 2,988% over the figure for the corresponding period of 2016, than the sales revenue which climbed 51.56% year-on-year, following which its share price traded at N1003.27 per share, up 4.99% at about 11.30am.
Sales income improved by N41.477bn from N80.442bn to N121.919bn, with only N884.774m representing export elements; while cost of sales increased by N25.865bn, a slightly faster 54.21% to N73.576bn, from N47.711bn; which left gross profit at N48.343bn, which was better than the preceding half-year’s N32.731bn, representing a N15.612bn or 47.69%.
Marketing and distribution expenses increased by N4.021bn or 31.31% to N16.863bn from N12.842bn; administrative expenses dropped slightly to N4.78bn from N4.917bn, resulting in operating profit of N26.699bn, compared with N14.97bn in the prior half year.
Finance income for the year jumped to N5.145bn, being interest income on bank deposits; from the N816.998m earned in the corresponding period of 2016, just as finance costs dropped by over 50% from N14.891bn to N7.385bn, made up of N2.212bn interest expenses on financial liabilities (N1.757bn in 2016); N5.173bn of net foreign exchange loss, as against N13.133bn previously; finance expense of N7.385bn, which reduced from N14.891bn. These helped to reduce net finance cost from N14.074bn in the first half of 2016 to N2.239bn.
Profit before tax therefore stood at N24.459bn from just N896.459m.
With income tax expense rising to N7.911bn from N360.64m, profit after tax improved significantly from N535.819m to N16.547bn, representing a N16.011bn or 2,988% leap, representing earnings per share of N20.88 from the preceding half-year’s 68 kobo, inspiring hope of juicier interim and final dividend payouts by the company in the course of the year, if the current earnings and profit momentum are sustained.