Nestle Nigeria Plc
<h4>Nestle Nigeria Ends Q1 On Loss Margine As Net Assets Wipe Out In One Fell Swoop</h4>
<p><strong><a href="https://openlife.ng/">OpenLife Nigeria</a></strong> reports that Nestle Nigeria Plc reported a pre-tax loss of N86.5 billion in the second quarter of the year ended June 30, 2023.</p>
<p>The losses contributed to wiping our Q1 profits taking its half-year profits to N61.6 billion one of the worst performance in years.</p>
<p>Nestle Nigeria’s losses are mainly due to a forex loss of N123.7 billion which impacted its profits.</p>
<p><strong>Key highlights for Q2 2023</strong></p>
<p><em><strong>ï§ Revenue N123.79 billion +19.2%</strong></em><br />
<em><strong>ï§ Gross profit N55.6 billion +50.6%</strong></em><br />
<em><strong>ï§ Operating profit N32.1 billion +62.5%</strong></em><br />
<em><strong>ï§ Finance cost N121.6 billion +2547%</strong></em><br />
<em><strong>ï§ Pre-tax losses of N86.5 billion -644%</strong></em><br />
<em><strong>ï§ Total debts N299.7 billion vs N172.7 billion (2023 Q1)</strong></em><br />
<em><strong>ï§ Working capital N61.9 billion vs N97.9 billion (2023 Q1)</strong></em><br />
<em><strong>ï§ Gross profit margin 41% vs 32.9% YoY</strong></em><br />
<em><strong>ï§ Operating profit margin 24% vs 17.6%</strong></em><br />
<em><strong>ï§ Retained earnings -N49 billion</strong></em><br />
<em><strong>ï§ Net assets wiped out now -N48.6 billion</strong></em></p>
<p><strong>Insights</strong></p>
<p>Nestle Nigeria’s result was mostly impacted by foreign exchange losses which printed at a whopping N123.7 billion during the quarter.<br />
<em><strong>ï§ <a href="https://www.vanguardngr.com/">The impact of the losses essentially wiped out Nestle’s retained earnings which could impact its ability to pay dividends this year if it is not able to address the issues.</a></strong></em><br />
<em><strong>ï§ Its net assets are also wiped out in one fell swoop as a result of the forex losses. Nestle had a net asset of N46.4 billion as of the first quarter of the year</strong></em><br />
<em><strong>ï§ Nestle has an intra-group loan of $454 million which may have contributed to the forex losses the company experienced.</strong></em><br />
<em><strong>ï§ Nestle might at this rate either raise capital to close the negative equity or convert some of the loans to equity or expect succor from forex appreciation.</strong></em></p>

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