Analysts have described Nestlé Nigeria Plc as a ‘macro story,’ linking the company’s fourth-quarter profitability to more stable macroeconomic conditions.
This insight was shared on the podcast “Drinks and Mics,” co-hosted by Ugo Obi-Chukwu, CEO of Nairametrics; Samson Esemuede of Zrosk Capital; Tunji Andrew, CEO of Awabah; and Arnold Dublin Green of Cordros Capital.
While exploring the factors contributing to Nestlé’s strong Q4 performance, Arnold Dublin Green from Cordros Capital remarked, “Nestlé is a macro story. Macros are turning around, inflation is no longer as sticky as it once was, and FX pressures are stabilizing on the naira.”
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He emphasized that these favorable developments likely played a significant role in boosting Nestlé’s profitability in the fourth quarter, particularly considering the recent FX challenges faced by FMCG companies.
Adding to this analysis, Mr. Samson Esemuede of Zrosk Capital pointed out that despite the improving macroeconomic landscape, Nestlé still needs to secure additional funding.
“Nestlé is that one company that needs to raise a bit of money. I believe retained earnings might remain negative for some time if no capital is raised,” he remarked.
Demonstrating signs of recovery from Q4 2024 results, Nestlé Nigeria enters 2025, where cutting finance costs, strengthening liquidity, and sustaining revenue growth are vital for long-term profitability.
Performance
Nestlé made a strong comeback in Q4 2024, reporting a profit after tax of N19.6 billion, a recovery from the N36.4 billion loss in Q4 2023.
- However, for the full year ending December 31, 2024, the company faced a loss before tax of N221.5 billion, a 113% increase compared to the previous year.
In Q4 2024, revenue surged by 95% year-over-year, reaching N293.5 billion, up from N150.5 billion during the same period in 2023.
- For the full year, revenue soared to N958.8 billion, marking a 75% increase from N547.1 billion in 2023.
- Sales in Nigeria comprised 99.3% of total revenue at N952.2 billion, with exports contributing just N6.5 billion.
While revenue growth was significant, the cost of sales increased even more sharply, climbing 97.75% year-over-year to N652.460 billion, squeezing gross profit margins.
CEO’s comment on the results
Commenting on the financial results, Wassim Elhusseini, CEO of Nestlé Nigeria, acknowledged the significant economic challenges that have influenced the company’s performance, particularly the elevated finance costs arising from foreign exchange revaluation losses.
“Our 2024 results exemplify the resilience of our brands and teams amidst a challenging business environment. The impressive 75.2% growth in revenue and a 35.6% increase in operating profit to N167.9 billion highlight our strong operational performance,” Elhusseini remarked.
He further emphasized the importance of the company’s return to profitability in the fourth quarter of 2024, achieving a net profit of N19.7 billion and effectively reversing the N36.4 billion loss reported in the fourth quarter of 2023.