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Nestle Nigeria Profit Drops By 67%, Despite 20% Turnover Rise, Offers N10.00 Dividend

Directors of food beverage giant- Nestle Nigeria Plc, on Thursday morning presented its 2016 audited financials to the Nigerian Stock Exchange (NSE), a major highlight of which was the 67% drop in profit after tax, despite the 20% increase in sales revenue, following the significant impact of its 328.59% and 143.92% rise in foreign exchange loss and tax expenses respectively.
The company however is recommending a dividend per share of N10 each, representing all of its N10 Earnings Per Share, as against previous year’s N27.50 each from N29.97 EPS.
Sales revenue for the year rose to N181.91bn (the bulk of which was generated from Nigeria), up N30.639bn from the N151.271bn recorded in 2015, as cost of sales rose by N22.658bn or 26.99% to N106.583bn from N83.925bn; resulting in a gross profit of N75.327bn, up from N67.345bn.
Marketing and distribution expenses increased from N25.904bn to N28.775bn; administrative expenses from N7.693bn to N8.338bn, bringing total operating expenses to N143.697bn from N117.524bn; leaving operating profit at N38.213bn, as against the previous N33.747bn.
The performance was impacted severely by the N15.996bn or 328.59% rise in finance cost from N4.868bn in 2015 to N20.864bn that arose from interest expense on financial liabilities of N4.577bn (up from N3.109bn) and net foreign exchange loss of N16.286bn as against the previous N1.758bn. Finance income (being interest on bank deposits) stood at N4.199bn, which rose from the previous N443.805m, resulting in a net finance cost of N16.664bn, compared to N4.424bn in the corresponding full year of 2015.
Profit before tax at N21.548bn represented a 27% decline from previous year’s N29.322bn, and as if that was not bad enough, net profit took a N15.812bn plunge from N23.736bn to N7.924bn, owing to the equally significant rise in income tax expense from N5.585bn in 2015 to N13.523bn, an increase of N8.038bn or 143.92%.
The dividend proposed indicates a 31% cut from N21.798bn to N15.06bn.

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