Nestle Nigeria Records N255 Billion Pre-Tax Loss in First Nine Months of 2024 Due to Rising Finance and FX Costs

Nestle Nigeria Plc reported a pre-tax loss of N255.38 billion for the first nine months of 2024. This marks a sharp increase of 350 per cent from the N56.65 billion loss recorded in the same period last year. The substantial rise is linked to higher finance costs and Nigeria’s foreign exchange volatility.

According to its unaudited financial statement, finance costs grew by 136 per cent to N369.15 billion. Net finance costs also increased by 147 per cent, reaching N366.22 billion. Nestle Nigeria recorded a foreign exchange loss of N285.29 billion. This was due to the naira’s devaluation, which impacted its foreign currency-denominated obligations, now over half of its liabilities.

Revenue rose by 68 per cent to N665.28 billion. This was driven by a 66.8 per cent increase in domestic sales and an 861.7 per cent jump in exports. However, costs climbed significantly. The cost of sales nearly doubled to N458.97 billion, and raw material expenses increased by over 100 per cent. These rising costs affected profitability, leading to a loss after tax of N184.27 billion, up 328 per cent from last year’s N43.07 billion.

Although Nestle Nigeria is turning to local sources for some ingredients, such as turmeric and cassava starch, to cut down on foreign currency needs, inflation and high operational costs continue to bite hard.

For the fiscal year 2023, Nestle Nigeria Plc reported a pre-tax loss of N104 billion, a sharp shift from the N71 billion profit achieved in 2022. In its financial statement published on the NGX on February 28, 2024, the firm attributed this downturn to a foreign exchange loss of N195 billion, which led to a significant drop in shareholder funds from N30.2 billion to a negative N78 billion.

Despite a rise in revenue and improvements in gross and operating profits, the company reported huge losses for the 2023 and 2024 fiscal years. This setback has also been experienced by other companies, facing similar financial pressures from foreign exchange losses.

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