Nestlé Nigeria Spikes 10%, Trailing Peak Price
The share price of Nestle Nigeria Plc jerked up by 10% last week, pushing its market valuation above N900 billion. The food producer was a member of a trillion naira valuation gang before it dipped massively due to selloffs.
For the company share that is closely held, one key driver is earnings performance, and then sentiment plays a key role. Unfortunately, trading records suggest that Nestle Nigeria Plc lacked either, though the company happens to be among dividend aristocrats in the local bourse.
The board paid a final dividend of N36.50 in 2022 following a 22% jump in profit while its leverage position increased, leading to N3.75 billion in net finance costs versus N1.45 billion income in the comparable period in 2022.
The company faced multiple challenges including rising rivalry with competitors. Its first quarter 2023 earnings were affected by a number of local issues, especially failed naira redesign policy and election.
Its share price had peaked at N1400, then the angel nosedived sporadically and it hit one of the lowest levels in its history. For shareholders, the counter is still good for investment as the year-to-date return remains positive.
In the first quarter of 2023, the company’s sales started on a healthy foot, reporting a 16.1% year-on-year increase in revenue. Its unaudited statement showed revenue printed at N127.97 billion from N110.23 billion in the comparable period in 2022.
The company growth was supported by a better performance recorded in the Food segment which actually accounted for 63.4% of revenue record and Beverages which accounted for 36.6% of revenue.
Its revenue growth came as the company raised prices due to an inflation surge in the local economy amidst its aggressive market penetration in the year. Nestlé Nigeria to Pay N36.50 Dividend on Each Share
Its results showed gross profit margin expanded by 113 basis points to 40.4% in the first three months of the financial year 2023, as revenue grew faster than the cost of sales.
Amidst a sustained rise in Nigeria’s inflation rate; Nestle reported that operating expenses jumped 36.6%, pushing a decline in pretax profit. Its financials showed pretax profit slumped 10% to N24.90 billion from about N28 billion in 2022.
The company settled with a profit after tax of N16.21 billion, a 9.8% drop when compared with the equivalent period in 2022.
Nestlé Nigeria Plc engages in the manufacture, marketing, and distribution of food and beverage products. It operates through the Food and Beverages segments.
The Food segment produces and sells food products under the Maggi, Cerelac, Nutrend, Nan, Lactogen, and Golden Morn brands. The Beverages segment offers products under the Milo, Chocomilo, Nido, Nescafe, and Nestlé Pure Life brands. #Nestlé Nigeria Spikes 10%, Trailing Peak Price
