Nestlé Nigeria Falls by 10% as Investors React to Negative Earnings
Sixty-three-year-old food and beverage company, Nestle Nigeria Plc, market value declined by about 10% after the company posted an unimpressive earnings performance for the first half of the financial year 2024.
Figures from its unaudited financial statement showed that Nestle Nigeria Plc.’s shareholders’ fund further declined to a negative N104.86 billion due to huge accumulated losses, widening the negative balance from N78.63 billion in 2023.
The company is now valued below N658 billion on the Nigerian Exchange, as its unimpressive earnings performance triggered negative trading sentiment on its share in the equities segment of the Nigerian Exchange.
Last week, in absolute term, Nestle Nigeria Plc’s stock market value declined by N71.339 billion just after the release of its first half of 2024 earnings scorecard.
Its share price slumped to N830 on the Nigerian Exchange over fresh selloffs, losing about 10%, from N920. The foods company has seen strong price decline due to negative investors’ sentiment.
At the current market price, the company is trading at more than 30% of its 52-week high, based on the data from the Nigerian Exchange. Nestle Nigeria Plc’s share price had increased to N1196.
Nestlé Nigeria’s sales grew to N406.9 billion in the first half of financial year 2024, representing an increase of 55% from N145.2 billion in half year of 2023.
The company’s gross profit grew by 18.64% to N127.3 billion from N107.3 billion in the same period of 2023. The food company’s operating profit rose to N63.1 billion versus N60.7 billion in the first half of 2023.
The company said devaluation of Naira led to an adverse impact on the profit after tax, resulting in a net loss of -N176.9 billion for the first half of the year.
Nestlé Nigeria is one of the FMCG companies that have significantly towed backward integration in Nigeria by sourcing over 80% of its key raw materials from local farmers.
The company is faced with heightened competition amidst weakening consumer purchasing power and a challenging business environment. These have been major headwinds to volume growth.
In the first half of 2024, the food company recorded a net loss of N176.91 billion, mainly driven by a surge in foreign exchange losses of N263.71 billion – a negative effect of Nigeria’s FX policy. #Nestlé Nigeria Falls by 10% as Investors React to Negative Earnings
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