Nestle Nigeria Announces N104 Billion Loss For 2023, Wiping Away Shareholder Capital

Nestlé Nigeria's capital base is wiped out by an FX loss of N195 billion, the first in years

Nestlé Nigeria Pic recorded a net loss of N79 billion for its operations in 2023 as a result of massive net foreign currency (FX) losses of N195 billion, which completely destroyed the company's capital base and left a N78 billion hole in the balance sheet.

This is the first loss the company has seen in a long time, and it represents a significant decline from the peak profit of about N49 billion that it reported in 2022.

The company that produces food and beverages released an audited financial report for the entire year that ended in December 2023, revealing that foreign exchange losses increased 23 times during the year and shattered the trajectory of steady expansion in operational activities.

The interest costs associated with the company's increased borrowings put further strain on things. At the conclusion of the year, finance expenses had tripled to N38.4 billion.

From N155.3 billion at the end of 2022 to N402.3 billion at the end of 2023, interest-bearing debts increased by more than 2.5 times.

The company's N78.6 billion retained loss at the end of 2023 appears to have replaced its N29.8 billion retained earnings at the start of the year.

The development has left negative shareholder funds exceeding N78 billion and drained the company's equity vaults of N30.3 billion.

Throughout the year, Nestle Nigeria's operating activities saw steady expansion, but the company was unable to translate improved operating results into profits due to foreign exchange losses.

At the conclusion of the 2023 operations, sales revenue increased by 22.5 percent to N547.1 billion, resulting in additional earnings of N100.3 billion for the year.

The increase in sales is supported by a deceleration in manufacturing costs, which increased by 13.4% to N329.9 billion, in contrast to a 22.5 percent expansion in turnover.

The year's gross profit increased by 39.4% to N217.2 billion as a result of cost savings from input expenses.

Expenses for marketing and distribution climbed by 28.7% to N73.8 billion, accounting for a somewhat higher percentage of sales income. Similarly, administrative costs increased by 83.6 percent to N20.1 billion during the course of the year.

A net write-back of financial asset impairment of N483.2 million, which increased from a net charge of N29 million in the previous year, offset the cost increases.

Consequently, the operating activity results were reversed by 41.5 percent, ending the year at N123.8 billion. Finance income, which increased by 19% to N5.7 billion at the end of the year, provided an additional boost.