Nestle Nigeria weathers economic headwinds, registers single-digit profit growth in interim period

NIGERIA – Nestle Nigeria Plc has reported a 4.62% rise in its Q3 profit to N12.4 billion (US$28m) from N11.8 billion (US$26.6m), despite an inflationary year occasioned by supply chain disruptions and rising energy costs, where companies have had to deal with increased production, marketing and distribution expenses.

The bottom-line performance was also propelled by a 23.15% rise in revenue to N111.021 billion (US$250m) compared to N90.151 billion (US$203m) in Q3-21.

The revenue growth was due to substantial growth across the Food and Beverages business segments.

“We believe price increases across the company’s product portfolio in Nigeria drove the growth in these segments.

“Nigeria still accounts for about 99% of the company’s revenue base, with a paltry 1% coming from its export market,” highlighted the consumer goods company.

Meanwhile, its gross profit margin shrank by 13.63% year-on-year to 33.40% in Q3-22 following faster growth in the cost of sales (+33.72% y/y) relative to revenue (+23.15%) y/y).

Consequently, operating margins declined to 16.84% from 21.96% with further pressures coming from marketing and distribution expenses (+23.96 y/y) and admin expenses (+14.11% y/y).

Another cost pressure came from net finance cost which grew by 155.2% year-on-year in Q3-22, due to a 388.05% y/y decline in finance income, despite a 9.96% y/y decline in finance cost.

This led to profit before tax declining by 19.55% on-year to N14.646 billion (US$33.1m) in Q3-22. However, a lower effective tax of 15.33% in Q3-22 compared to 34.89% in Q3-21 led to the 4.62% year-on-year growth in profit after tax to N12.4 billion (US$28m) from N11.853 billion (US$26.7m) recorded in Q3-21.

In other related news, the food giant has appointed its current Head of Finance & Control Nestlé Central and West Africa Region, Mr. Ricardo Chavez, as Head of Finance & Control, Nestlé Middle East and North Africa (MENA), effective February 1, 2023.

Due to this new appointment, Mr. Chavez has decided to step down as a Director on the Board, on January 31, 2023.

To replace Mr. Chavez as a non-executive director of the Company effective February 1, 2023, is Mr. Martin Kruegel, currently Chief Financial Officer of Nestlé Japan.

Mr. Kruegel will also become the Head of Finance & Control, Nestlé Central and West Africa Region, effective February 1, 2023.

Martin started his career at Nestlé Germany in 1995, where he held various roles in Supply Chain, Finance, IT and Business Co-Piloting. In 2006, he was appointed Finance Manager Cereal Partners for the Nordic Region (Sweden, Denmark, Norway, Finland).

Two years later, he was promoted to Head of F&C for Nestlé Nigeria. In 2014, he was transferred to Kuala Lumpur as Head of F&C, Nestlé Malaysia/Singapore.

Since February 2019, he has been based in Kobe as Chief Finance Officer (CFO) of Nestlé Japan. As CFO, Martin has played a key role as co-pilot for the Business and as leader of the Finance community of Nestlé Japan.

He has greatly contributed to the sustainable improvement of Nestlé Japan’s top-and bottom-line through important company-wide approaches including turnaround of e-commerce business, portfolio management/SKU optimization, structural costs improvements, focus on Sell-Out and offtake.

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