The directors of Nestle Nigeria Plc have announced the results of the company’s operations for the nine month period ended 30th September 2016, showing a 97 percent decline in profit for the period at N484.7 million from N17.2 billion recorded in the same period of 2015.
The results announced through the Nigerian Stock Exchange (NSE) however showed a 20 percent increase in revenue for the company from N108 billion to N129 billion.
The company recorded a 29 percent increase in cost of sales from N60 billion to N77.5 billion, marketing and distribution expenses rose 11 percent to N20 billion from N18 billion and Administrative expenses climbed 25 percent to N6.7 billion from N5.4 billion.
The company recorded a 459 percent increase in finance income that stood at N2.2 billion from N378.7 million, but finance costs also rose by 418 percent to N22 billion from N4.2 billion.
Consequently, Nestle’s profit before income tax dropped 73 percent to N5.5 billion from N20.8 billion, while income tax expense rose 40 percent to N5.0 billion from N3.6 billion recorded in the same period of 2015.
The company’s statement on the result released through the NSE and signed by its company secretary and legal adviser Bode Ayeku, attributed the dwindling profit to the naira devaluation and increase in the company’s income tax.
“The revenue of the Company increased by 19.9 percent for the 9 month period which is a confirmation that our brands continue to enjoy strong patronage from consumers in spite of the inflationary pressures, weak purchasing power and the challenging operating environment.
Although the gross profit increased by 8.2 percent for the same period, net profit has been adversely impacted by the revaluation of the foreign loans due to devaluation of the Naira. In addition, the increase in the company income tax as a result of the expiration of the pioneer status impacted the net profit for the period.
The Board and Management pledged full committed to the long term potential of the business in Nigeria adding that they would continue to take proactive steps and cost saving initiatives to minimize the impacts of current macroeconomic challenges.