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Nestle Nigeria Posts N104bn Loss In 2023, Shareholders Funds Wiped Out

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Nestle will also not be able to pay dividends based on the status of its shareholder’s funds.

Nestle Nigeria Plc has lost a staggering N104 billion before tax for the year ended 2023 compared to a profit before tax of N71 billion same period in 2022.

Nairametrics reported that this is according to the 2023 financial statement of the company published on the NGX on Wednesday, 28th February 2024.

The report added that the company reported a foreign exchange loss of N195 billion which was the major reason for the overall loss reported by the company.

The forex losses also resulted in a wipeout of the company’s shareholder funds which is now a negative N78 billion from N30.2 billion a year earlier.

This means the company’s liabilities now exceed its assets.

Nestle will also not be able to pay dividends based on the status of its shareholder’s funds.

Breakdown of the result:
Revenue for the year is N547.1 billion up from N446.8 billion reported a year earlier

Gross profit N217.7 billion versus N155.7 billion (2022), +39.8% YoY

Operating Profit N123.7 billion versus N87.4 billion (2022), +41.5% YoY

Net Finance Cost -N227.8 billion versus N16.3 billion (2022), +1,297%

Pre-tax loss of N104 billion versus Pre-tax profit of N71.1 billion (2022).

Loss after tax of N79.4 billion versus Profit after tax of N48.9 billion (2022).

Shareholder Funds -N78 billion versus last year’s N30.2 billion.

Interest-bearing loans of N402.2 billion versus N155.2 billion (2022)

According to records seen by Nairametrics, Nestle has drawn down about $362.25 million in foreign currency loans. The loans were obtained from its parent company Nestle SA.

The company acknowledged the effect of the losses on its going concern status stating as follows

“The Company made a net loss of N79 billion (2022: net profit N49 billion) for the year ended 31 December 2023 and as at that date, its total liabilities exceeded its total assets by N78 billion (2022: net asset N30 billion).”

“Despite the strong operational performance, the net profit is impacted by significant devaluation of the naira. The company believes that as macroeconomic situation stabilizes, the same would yield positive impact to the overall economy as well as company results.”

“The company has taken robust margin management and cost management initiatives to address significant forex volatility and cost inflation.”

“In 2023, the company’s revenue grew by 22.4%, an increase of ₦100billion and the operating profit increased by 41.2%.”

The negative shareholder funds incurred by Nestle will most likely lead to a fresh raise of capital. This is to ensure the going concern status of the company is guaranteed.

Nestle will most likely raise capital over N100 billion to ensure it continues to operate effectively.

Meanwhile, the net cash flow of the company remained positive at N49 billion despite the negative shareholder funds.

Nestle also stated that during the year it invested N61 billion in the expansion of its lines at the three factories located in Agbara, Sagamu, and Abaji.

They also invested in the enhancement of our distribution center (DC) operations at Sagamu, Ogun State.

Amidst the economic challenges it also launched 5 new products and ventured into affordable plant-based nutrition through NIDO Soya.

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SEE States With Highest And Lowest Food Price Inflation Rates In Nigeria For March 2024

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The lastest data released by the National Bureau of Statistics (NBS), has unveiled states in Nigeria with the highest and lowest food inflation rates.

The data released on Monday by the NBS, are for the month of March 2024.

According to the NBS, the states with the highest food inflation rates are:

Abia (5.17%)

Cross River (5.14%)

Bayelsa (4.75%)

Those with the lowest food inflation rates are:

Borno (1.59%)

Yobe (2.08%)

Adamawa (2.12%)

Meanwhile, Nigeria’s inflation rate has increased to 33.2% for the month of March 2024 according to the latest data released on Monday by the National Bureau of Statistics (NBS).

The new figure represents a 1.5% increase from the 32.7% recorded in February 2024.

The NBS data shows that on a year-on-year basis, the headline inflation rate was 11.16% points higher compared to the rate recorded in March 2023, which was 22.04%. This shows that the headline inflation rate (year-on-year basis) increased in the month of March 2024 when compared to the same month in the preceding year (i.e., March 2023).

Furthermore, on a month-on-month basis, the headline inflation rate in March 2024 was 3.02%, which was 0.10% lower than the rate recorded in February 2024 (3.12%). This means that in the month of March 2024, the rate of increase in the average price level is less than the rate of increase in the average price level in February 2024.

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JUST IN: Inflation Rises to 33.20% in March

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The National Bureau of Statistics (NBS) Monday, April 15, has said that inflation rate increased from 31.70% in February 2024 to 33.20% in March 2024.

According to the Bureau in its Consumer Price Index (CPI) and Inflation Report March 2024, inflation rose by 1.50% point compared to the previous month.

NBS said: “In March 2024, the headline inflation rate increased to 33.20% relative to the February 2024 headline inflation rate which was 31.70%.

“Looking at the movement, the March 2024 headline inflation rate showed an increase of 1.50% points when compared to the February 2024 headline inflation rate.”

The document said on a year-on-year basis, the headline inflation rate was 11.16% points higher compared to the rate recorded in March 2023, which was 22.04%. This shows that the headline inflation rate (year-on-year basis) increased in March 2024 when compared to the same month in the preceding year (i.e., March 2023).

NBS further noted that on a month-on-month basis, the headline inflation rate in March 2024 was 3.02%, which was 0.10% lower than the rate recorded in February 2024 (3.12%).

The Bureau explained this means that in March 2024, the rate of increase in the average price level is less than the rate of increase in the average price level in February 2024.

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SEE Black Market Dollar To Naira Exchange Rate Today – April 15, 2024

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The exchange rate for the dollar to the Naira in the black market, also known as the parallel market, stands at N1135 for buying and N1140 for selling as of Sunday, April 14, 2024. These rates were reported by sources at Bureau De Change (BDC) in Lagos.

It’s important to note that the Central Bank of Nigeria (CBN) does not recognize the parallel market and advises individuals to conduct foreign exchange transactions through authorized banks.

Buying Rate: N1135
Selling Rate: N1140
Meanwhile, the CBN’s official rates for the dollar to the Naira today are:

Buying Rate: N1237
Selling Rate: N1238
Please be aware that actual rates may vary depending on where you conduct your forex transactions, as prices are subject to change.

Optimistic Forecast for Naira: In a recent forecast by Goldman Sachs Group Inc., it is anticipated that the Nigerian currency, the Naira, could significantly strengthen, potentially trading below ₦1,000 to the dollar in the near future. This outlook follows an earlier projection by Goldman Sachs on March 10, which predicted the Naira reaching ₦1,200 per dollar within the next twelve months.

Andrew Matheny, an economist at Goldman Sachs, expressed optimism during an interview with Bloomberg, suggesting that the Naira might surpass earlier expectations by trading even lower than the projected ₦1,200 against the dollar. He indicated the possibility of the Naira trading below ₦1,000 in the foreseeable future.

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