Five Takeaways From Nestle’s performance in Five Years

By Oladeinde Oladipo

 Over the past three decades, Nestle Nigeria has remained the most efficient consumer goods firm in the country, delivering higher returns on equity to shareholders.

The firm recorded a profit after tax (PAT) of N18 billion in the first quarter of 2022. The profit figure represents 45 percent of the full-year profit of N40 billion the company posted at the end of the 2021 financial year.

The company’s first-quarter interim report at the end of March 2022 shows a combination of growing incomes and a slowdown in costs that define a promising year for the food and beverages company.

The firm achieves this rare feat even amid two recessions brought on by lower crude oil price while red-hot inflation since 2015 coupled with protracted foreign exchange scarcity and supply chain challenges undermined sector players.

In this article, five charts give insights into Nestle’s performance, comparing the company’s results over seven years.

Profit

Nestle recorded its highest Q1 profit of N17.98 billion in 2022. The firm’s profit margin also climbed to 16.3 percent in the first quarter – the company’s best performance in six years.

Last year, its profit margin went down from close to 14 percent in the preceding financial year to about 11 percent.

Revenue

Findings showed Nestle’s improved first-quarter financial performance was triggered by accelerating sales revenue and recovering profit margin.

With an accelerated increase of 26 percent in turnover to over N110 billion in the first quarter from N87.26 billion in the previous quarter, analysts say Nestle can hope for the strongest growth in sales in recent years this year.

Long term receivables

Nestle saw its long-term receivables drop by 8 percent to N2.29 billion from N2.50 billion.

Long-term receivables represent the long-term portion of loans granted to the Company’s employees and amount receivable from customers on the trade assets deployed which are expected to be paid after one year from the date of the financial statements.

Inventories

Nestle’s inventories, which represent one of the firm’s important assets because it’s one of the primary sources of revenue generation and subsequent earnings for the company’s shareholders, rose to N63.22 billion in March 2022, a 7 percent increase from N58.96 billion in the prior year.

The least N12.26 billion inventories was recorded in March 2016.

CEO’s comment

The Managing Director and CEO of Nestlé Nigeria PLC, Wassim Elhusseini:

“We remain optimistic that we can continue to improve our business by empowering our people and ensuring a continued supply of essential nutritious food and beverages to consumers. We will continue to focus on these two important areas while caring for our communities and business partners, and all collaborators across our value chains to sustain this growth throughout the year.”