Nestle: Firm proposes N15 interim, as MD reassures stakeholders of better returns

….Q3 2017
Bonny Amadi

The Managing Director of Nestle Nigeria Plc has assured the company’s stakeholders of sustained returns on investments, quality products and sustained contribution to physical and health being through healthy products.

The company’s new MD, Mr. Mauricio Alarcon, who was appointed as the boss of Nestle Nigeria Plc effective 1st October, 2016, gave the assurance at the Nigerian Stock Exchange on Monday, where he enjoyed the privileged opportunity to sound the exchange’s closing bell for the day.

The visit by the company’s management team coincided with the release of its third quarter 2017 result, which showed sound growth in key performance measuring indices.

Mauricio, accompanied with the company’s chairman, David Ifezulike, and key board members, who was visiting the exchange for the first time since assuming office, said ‘it wouldn’t be more appropriate to be here at this time, as it is also encouraging to present our Q3 result this period.”

He said that the company’s performed creditable in the Q3 period, due to the workability of its strategy, adding that the N15 interim proposed by the company demonstrates commitment to reward on shareholders investments.

The MD said that Nestle is focused on its vision to improve the quality of life all the stakeholders, shareholders and that of the people through sustainable production of healthy products and profitability to reward investors “we produce nutritious products.”

The Doyen of the stockbroker, Mr. Sam Ndata, however called on the company to ensure presentation of its facts behind the figures to the stockbrokers’ community for better understanding of the company’s result.

Meanwhile, the company’s result for Q3 2017 released by the NSE on Monday ,showed that Q3 sales and PBT grew by 29 per cent y/y; and 117 per cent y/y to N63.3billion and N10.0bn, respectively.

However, the company’s profit after tax (PAT) grew to N6.4bn, against a loss after tax of –N51million in the same Q3 period of 2016.

PAT came in at N10.0bn compared with a loss after tax of –N51million in the corresponding period of 2016. Topline y/y growth continues to benefit from double-digit price increases which occurred in Q4 2016 mainly.

Similar to Q2, Q3 profitability was boosted by a gross margin expansion of 433bps y/y to 43.5%, which primarily attributed to relatively cheaper access to fx for imports. The big downside to this set of numbers was an fx loss of –N6.0bn in Q3 (-N11.2bn in 9M 2017), which compares with an fx-related loss of –N6.3bn in Q3 2016, a -N19.4bn reported in 9M 2016.

This fx loss was, however, not sufficient enough to offset gains coming through from top line growth and the gross margin expansion. Sales for both Nestle’s Food and Beverage categories were up by around 28% y/y to N39.1bn and N24.2bn respectively.

Sequentially, while sales were up 4.2 per cent q/q, PBT came in flattish, mainly on the back of the reported fx loss of –N6.0bn, which compares with –N4.1bn in Q2. PAT declined -22% q/q, due to a comparatively higher tax expense in Q3.