NESTLÉ NIGERIA PLC DAZED BY NAIRA DEPRECIATION.

Nigeria's foremost blue chip quoted company, Nestlé Nigeria PLC, looks set to declare nothing or comparative peanuts as dividend this financial for the first time in years

According to the figures for the nine months to September released recently, the company's distributable profit is running 97.2% down at N483.7m due to higher tax burden and more importantly, the heavy weight of foreign loans.

Nestle Nigeria PLC had managed to cruise home with N5504.5m as profit before tax during the period but expiration of pioneer status led to the tax man taken much more as government share leaving shareholders with only N484.7m profit after tax.

Nestle Nigeria 2016 tale of burdens did not start there though, because the prime factor that led to 73.6% drop in profit before tax was the superlative leap in cost of servicing debts to N21984.1m from only N4241.2m by September 2015.

Although the growth in finance income was more phenomenal from N378.7m to N2118.8m; it could only cushion the effect of net finance on the company's fortune.

To make matters worse, Nestle lost its grip on costs as cost of sale grew by 29.3% to N77549.2m ahead of 19.9% increase in core revenue to N129482.3m; and as administration expenses rose by 24.7% to N6676.4m.

Only marketing and distribution costs behaved well, rising by only 10.6% to N19886.6m, that is well behind  revenue increase.

In other words, Nestle Nigeria PLC that by September 2015 reported a comfortable double digit profit margin (19.2%) , by the same time this year, could only manage to close with 4.18%.

Rest assured this will no more guarantee Nestle Nigeria plc's place as highest priced equity in the Nigerian stock exchange for years.

NESTLÉ NIGERIA: Nbm Nine Mths.
                            2016.        2015
Total revenue 131601.1 108364.7
Core revenue  129482.3 107986.0
Cost of sale.     77549.2.  59975.3
Gross profit.     51933.1.  48010.7
Marketing etc  19886.6.  17982.4
Administration  6676.4.    5351.9
Finance inc.       2118.8.     378.7
" costs.             21984.1.    4241.2
Profit b4 tax.     5504.5.   20814.0
Profit after tax    484.7.     17236.8
Profit margin %    4.18.         19.2

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