Nestle Nigeria Plc, Nigeria’s highest-priced stock, made a slow start for this year as sluggish sales and relatively high costs reduced profit margins in the first quarter.
Interim report and accounts of Nestle Nigeria for the three-month period ended March 31, 2013 showed that average profit per unit of sale dropped by some three percentage points, pushing pre and post tax profits downward by four per cent and 3.0 per cent.
While turnover rose marginally by seven per cent during the period, average pre-tax profit margin slipped to 22.96 per cent as against 25.64 per cent recorded in comparable period of 2012.
The report showed turnover of N30.70 billion as against N28.67 billion recorded in corresponding period of 2012. Profit before tax however, dropped from N7.35 billion to N7.05 billion while profit after tax fall from N6.2 billion to N6 billion.
The first quarter report set a downbeat for the cheery performance of the food and beverages giant in 2012, which had enabled the company to pay about N16 billion as cash dividends.
It paid N14.66 billion as final cash dividends for the 2012 business year, bringing total cash payouts for the year to N15.85 billion. The food and beverage giant had earlier declared interim dividend of N1.19 billion.
The dividend breakdown indicated final dividend per share of N18.50 in addition to interim dividend of N1.50 paid in December 2012, bringing total dividend per share to N20.
Key extracts of the audited report and accounts for the year ended December 31, 2012 showed a general improvement in the profitability of the company. On the average, Nestle Nigeria made N21.46 in pre-tax profit on every N100 unit of sales in 2012 as against N18.58 recorded in previous year. Gross profit margin also improved from 41.44 per cent in 2011 to 42.99 per cent in 2012.
While total sales rose by 19.1 per cent, improved cost management magnified the impact of sales growth on the bottom-line, pushing pre and post tax profits up by 37.64 per cent and 28.12 per cent respectively.
Total sales stood at N116.71 billion in 2012 as against N97.96 billion in 2011. Gross profit rose from N40.59 billion to N50.17 billion. Profit before tax increased to N25.05 billion in 2012 compared with N18.20 billion in 2011. Profit after tax rose from N16.50 billion to N21.14 billion. With these, earnings per share improved from N20.81 in 2011 to N26.67
Managing Director, Nestle Nigeria Plc, Mr. Martin Woolnough recently expressed optimism that the food and beverage company would achieve better results in 2013 as it consolidates its operations and harness potential of recent investments.
Speaking briefly during the bell ringing ceremony at the Nigerian Stock Exchange (NSE) in Lagos, Woolnough said the company had a very good start this year, which it expects to sustain the momentum through the year. The ceremony was to commemorate Nestle Nigeria’s N5.4 billion ultra-modern distribution centre in Agbara, Ogun State.
He said the investing public should always expect good results from the compan, assuring that the board and management will continue to work to retain value for shareholders.
He said that the company has invested N100 billion in its Nigerian operations between 2007 and 2012, which showed the commitments of the multinational to Nigeria.
