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Nestlé declares post-tax loss of ₦79bn as Nigeria battles forex crisis

The devaluation of the Naira adversely affected the company's profit after tax.

Nestlé declares loss after tax of ₦79 billion [Reuters]

According to the company’s financial statement highlighting the 2023 business year, Nestlé Nigeria PLC’s sales which stood at ₦547.1 billion in 2023, recorded a 22.4% increase with over ₦100.2 billion when compared to the sales figure in 2022.

The Gross profit increased by 39.4% to ₦217.2 billion during the year in review from ₦155.8 billion recorded in 2022 while the operating profit rose by 41.2% to ₦122.7 billion, recording an increase of ₦35.8 billion when compared to the figures in 2022.

The statement however noted that the devaluation of the Naira adversely affected the company's profit after tax, resulting in a loss of ₦79.5 billion for 2023.

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More analysis of the financial statement showed about 60% of Nestlé Nigeria's liabilities were made up of loans denominated in US dollars, a major setback to the company as this occurred when the value of the Naira tumbled by about 70%.

When Nestlé's debts were converted into the local currency, the debts shot up to ₦402.3 billion from ₦155.3 billion within a year.

That took the loss before tax to ₦104 billion, but a tax credit in the sum of ₦24.6 billion from fiscal authorities, helped soften the impact of that expense on the bottom line, cutting loss after tax to ₦79.5 billion.

Commenting on the results, the Managing Director and CEO of Nestlé Wassim Elhusseini assured its customers and shareholders that the company remained dedicated to the purpose of unlocking the power of food through responsible local sourcing and of the high-quality nutritious food and beverages that families across Nigeria prefer.

The devaluation of the Nigerian Naira in 2023 which led to a revaluation of our foreign currency obligations undoubtedly impacted our financing cost and consequently the profit after tax. However, we remain optimistic of our capacity to overcome the current economic difficulties and emerge stronger.” He added.

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Apart from Nestlé, some other global brands have experienced similar downturns with some exiting the country in recent times.

Some of the companies that have been affected by Nigeria’s economic crisis include Procter & Gamble, GSK – maker of Ribena, Panadol and Sensodyne Sanofi, a French pharmaceutical multinational, Jumia Food, and Bolt Food among others.

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