Nestle Shareholders Seek Bonus Shares, Interim Div, Lament Huge Debts

Approve Payment Of N7.926bn Dividend
Chairman Blames Forex Hiccups For Rising Debts

Shareholders of Nestle Nigeria Plc, on Tuesday in Lagos, applauded the board and management for being able to pay N7.926bn or N10 dividend per share, despite the difficult operating environment, which however left in its wake: bloated operating costs and thinning profits.
Speaking at the annual general meeting, the shareholders urged the board to consider issuing bonus shares to further enhance liquidity of the company’s stock, while an interim dividend would not be a bad idea, rather than delaying the payment until year-end for a final dividend, given the time value of money.
Specifically, Sir Sunny Nwosu, Coordinator emeritus of the Independent Shareholders Association of Nigeria (ISAN), urged Mauricio Alarcon, the new managing director and chief executive to work towards ensuring the company considers distributing bonus shares during his tenure. In that way, he said, the company would be harkening to the clamour of Nigerian investors over the years, even as he prayed for more bumper harvest in the years to come.
Williams Adebayo, another shareholder, while noting the rise in sales revenue despite the recession in the country that hampered the purchasing power of many, said it is a testimony to the fact that Nigerians are happy with the array of products manufactured and distributed by Nestle.
He however expressed dissatisfaction with the galloping rise in the company’s loans and borrowings from N17.108bn in 2015 to N40.13bn, which he said is worrisome, urging the directors to clean the books through several options available, including a rights issue.
While aligning with the call for interim dividend this year, Nona Awoh, also a shareholder, lamented the company’s N4.4bn unclaimed dividend portfolio, describing it as scandalous, following which he suggested that management should empower its investor relations unit to drive down the number. He charged Alarcon to take this as a challenge, just as the soaring cost of sales that now threaten returns on shareholders’ investment in the company, at a time when 82% of raw materials are sourced locally.
While calling for funding of more research in Nigerian universities to cut the bloating cost, Awoh expressed reservation at the fact that N46.737bn was spent on sourcing raw materials during the year, from N37.097bn in 2015, a situation he blamed on problems encountered in the sourcing of forex by manufacturing companies.
Another task for Alarcon, Awoh continued, is the need to also drive down the N87.4bn net debt position of Nestle Nigeria for which interest paid is N21bn, an amount many thriving companies Nigeria do not record as revenue in a whole year.
Responding, Nestle Nigeria’s chairman, David Ifejulike, assured that the company would never compromise on its products quality and that the issue of bonus shares is being given serious consideration by the board. The matter, he assured, would be proposed to the shareholders whenever the board considers it appropriate.
He blame the huge debt profile on the massive devaluation of the Naira over the recent months, made worse by the scarcity of foreign exchange in the country, which is now being eased thankfully by the Central Bank of Nigeria (CBN) under its new policy actions, which makes forex available for payment of foreign currency denominated loans.
The chairman assured that the company is also considering recapitalizing via rights issue at the appropriate time, while urging shareholders to complete necessary documentations to enable electronic transfer of dividends to their bank accounts as being promoted by stakeholders in the capital market to put a final stop to the issue of unclaimed dividend.
He also assured that the company has continued to partner the International Institute for Tropical Agriculture (IITA) to support local production of grains and other raw materials.
“All the maize and sorghum we use (for manufacturing) are locally sourced… many local raw materials have been used to replace previously imported ones,” he stressed further.

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