Nestle Nigeria posted a loss after tax of N164.95 billion for the year ended December 2024, from a loss position of N79.47 billion as at December 2023.
The company incurred foreign exchange revaluation loss of N290.16 billion, compared to N195.07 billion the previous year as the depreciation in the value of the Naira ballooned dollar denominated liabilities.
Aside from high inflation, cost pressures from higher material prices, and volatile exchange rates, the sector is also beset by rising borrowing costs brought on by the central bank’s aggressive monetary policy.
For instance, the consumer goods giant’s finance costs spiked by 146.67 percent to N102.13 billion in the period under review from N37.80 billion the previous year.
The latest National Bureau of Statistics (NBS) inflation report shows that Nigeria’s annual inflation rate fell in January after the statistics office revised the data used to calculate household expenditure, clouding the interest-rate outlook.
Consumer prices rose 24.5% in January, Prince Adeyemi, head of the National Bureau of Statistics said. That compared with an unrevised 34.8% in December.
The monetary policy committee (MPC) of the Central Bank of Nigeria (CBN) has retained the monetary policy rate (MPR), which benchmarks interest rates in the country, at 27.50 percent.
Nigeria 10 year bond yield was 19.57 percent on Friday February 21, according to over-the-counter interbank yield quotes for this government bond maturity. Historically, the Nigeria 10-Year Government Bond Yield reached an all-time high of 22.35 in January of 2025.
The adoption of the revaluation model for Nestle Nigeria’s lands, buildings, plants and machinery as it transitioned from historical cost accounting was a boon. This change resulted in a net revaluation gain of N150 billion, which helped reduce accumulated losses and negative shareholders’ funds.
There is light at the end of the tunnel for the company as it remains resilient, posting double-digit topline growth, driven by continued price adjustments and strategic capacity expansions.
Sales were up 75.24 percent to N958.81 billion in December 2024, from N547.11 billion as at December 2023.
That resulted in an excellent performance as operating profit increased by 35.61 percent to N167.87 billion in the period under review from N123.78 billion the previous year.
Analysts at Meristem Securities are optimistic that there will be a moderation in the impact of currency depreciation on finance costs, as the rate of Naira devaluation is unlikely to reach the levels seen in 2024.
“As a result, the pressure from rising borrowing costs is expected to ease,” said the analysts.
It seems the market is pricing in optimism and positive prognosis as Nestle Nigeria has gained +11.43 percent since the start of the year, outperforming the NGXASI index +4.61 percent.
“We remain optimistic that our ongoing initiatives to tackle economic challenges will yield positive results and support consumer demand. Our performance in Q4 2024 demonstrates that we are well-positioned to tackle the current challenges and deliver long-term value to our shareholders, guided by our dedication to operational efficiency and innovation.
“We will prioritize initiatives that create shared value for all stakeholders, as they contribute to our long-term sustainability while we provide nutritious foods and beverages to meet and exceed their expectations,” said Wassim Elhusseini, CEO/Managing Director of Nestlé Nigeria PLC.
“We will prioritize initiatives that create shared value for all stakeholders, as they contribute to our long-term sustainability while we provide nutritious foods and beverages to meet and exceed their expectations,” said Elhusseini.
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