Nestle Nigeria Nets N43bn Profit, Increases Dividend Payout By 90%

The board of food and beverages giant- Nestle Nigeria Plc, published its audited financials for the year ended December 31, 2018, late Tuesday, highlights of which included the 28% growth in profit before and after tax, faster than the marginal 9% limp in sales revenue.
This notwithstanding, the directors have proposed a very generous 90% increase in payout, declaring a total dividend of N37.651bn, up from N19.816bn in the corresponding period of 2017. This translated to a total dividend of N47.50 from Earnings Per Share of N54.26; compared to the N25 total payout in prior year, from N42.55 earnings.
A breakdown of the dividend shows that N20 had been paid as interim, up from N15; following which shareholders will now receive N38.50 as final, compared to N27.50 per share in 2017, subject to approval at the next annual general meeting.
The dividend is however payable to shareholders whose names appear in the register of members as at close of business on May 10, 2019, following which the register of shareholders would be closed from May 13 to 17, 2019, while payment is billed for May 29, 2019
A further breakdown of the final dividend declared for 2018, according to the board, N34.20 is to be paid “from the profit for the year ended 31 December, 2018 and N4.30 from the after tax profit for the year ended 31 December, 2009.” This may however need to be explained going forward.
Details of the results showed that revenue for 2018 rose to N266.274bn from N244.151bn, with the food segment contributed the lion’s share of N168.171bn, compared to N153.226bn in 2017; followed by beverages at N98.102bn, from N89.925bn. Cost of sales increased by N9.074bn or 6.33% from N143.28bn in 2017 to N152.354bn, including the N104.147bn cost of raw materials and consumables, up from N97.524bn in 2017. This left gross profit at N113.92bn, up from N100.871bn.
Marketing and distribution expenses increased to N43.489bn, up from N35.157bn, out of which distribution expense rose slightly to N9.761bn from N8.698bn and sales promotion from N12.437bn to N13.488bn. Advertising cost climbed to N4.491bn from N2.987bn. Administrative expenses dropped from N10.015bn to N9.789bn; resulting in operating profit of N60.64bn, up from N55.698bn.
Finance income slumped to N1.716bn, being interest income on bank deposits for the period, representing N4.523bn or 72.49% from N6.239bn; just as finance costs fell from N15.109bn to N2.606bn, down by 82.75%. Of this, interest expense on financial liabilities stood at N2.51bn, down from N3.94bn in 2017; while net foreign exchange loss fell significantly from N11.168bn to N96.069m. This resulted in net finance cost of N889.885m, compared to N8.869bn in the corresponding period of 2017.
Profit before tax therefore stood at N59.75bn, compared to N46.828bn; while income tax expense stood at N16.742bn from N13.104bn; following which profit after tax grew from N33.723bn to N43.008bn.

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