Nestle Nigeria Q1’20 Profit Drops Despite Lower Finance Costs
By Dipo Olowookere
It was not really a palatable moment for Nestle Nigeria Plc in the first three months of 2020 going by the financials of the company for the period.
According to its Q1’20 earnings, the revenue generated in the first 90 days of the year slightly depreciated to N70.3 billion from N71.0 billion in the same time of the prior year.
Nestle Nigeria, which trades its shares on the local stock exchange, said its costs of sales declined to N38.7 billion from N39.5 billion, with distribution, sales and marketing expenses rising to N11.0 billion from N10.4 billion.
In addition, the administrative costs rose to N3.1 billion from N2.0 billion, while investment income dropped to N335.2 million from N504.0 million.
However, the gross profit marginally increased to N31.7 billion from N31.5 billion, while operating profit decreased to N17.5 billion from N19.1 billion, with finance costs at N417.9 million, lower than N469.4 million in Q1 2019.
A look at the bottom-line of the results indicated that Nestle Nigeria posted a profit before tax of N17.5 billion in the first quarter of 2020 in contrast to N19.1 billion in the same period of 2019 and a profit after tax of N11.2 billion versus N12.9 billion, with an earnings per share (EPS) of N14.21 in Q1 2020 versus N16.21 in Q1 2019.
On its cash flows, the firm said it recorded N21.5 billion as cash flow from operating activities in the first three months of this year compared with N16.2 billion in the corresponding period of 2019.
Also, the net cash generated from operating activities was N21.1 billion as against N16.0 billion.
Commenting on the results, Nestle Nigeria said, “As the COVID-19 pandemic continues to have an impact on a global level, we have three key priorities as a company: safeguarding the health and wellbeing of our people, ensuring business continuity to meet consumer needs and supporting communities with relief efforts.
“Nestlé Nigeria is working closely with the government, health authorities and other private sector players to respond to the challenge.
“For the company’s March 31, 2020 financial statements, the Coronavirus outbreak and the related impacts are considered non-adjusting events as the company has a robust business continuity plan in place to ensure an uninterrupted supply of essential food and beverages.
“Consequently, there is no impact on the recognition and measurement of assets and liabilities.
“Due to the uncertainty of the outcome and duration of the current events, it is too early to quantify the overall impact of the outbreak on the company’s financial position, results of operations or cash flows in the future.”