Nestle Nigeria Plc has announced a pre-tax loss of N86.5 billion for the fiscal second quarter ended June 30, 2023.
As a result of the losses, Q1 gains were completely erased, bringing the half-year profits to N61.6 billion, which was one of the worst results in recent memory.
The main cause of Nestle Nigeria’s losses was a forex loss of N123.7 billion, which had an effect on its profitability.
Foreign exchange losses, which totaled a staggering N123.7 billion during the quarter, had a significant negative influence on Nestle Nigeria’s performance.
Nestle’s retained earnings were virtually destroyed by the losses, which would affect its ability to pay dividends this year if the problems are not resolved.
The FX losses also result in a complete wipeout of its net assets. As of the first quarter of the year, Nestle had a net asset of N46.4 billion.
A $454 million intra-group loan from Nestle may have contributed to the company’s FX losses.
Key highlights for Q2 2023:
Revenue N123.79 billion +19.2%
Gross profit N55.6 billion +50.6%
Operating profit N32.1 billion +62.5%
Finance cost N121.6 billion +2547%
Pre-tax losses of N86.5 billion -644%
Total debts N299.7 billion vs N172.7 billion (2023 Q1)
Working capital N61.9 billion vs N97.9 billion (2023 Q1)
Gross profit margin 41% vs 32.9% YoY
Operating profit margin 24% vs 17.6%
Retained earnings -N49 billion
Net assets wiped out now -N48.6 billion