Nestle Nigeria’s Revenue to Reach N1.05 Trillion with Naira Stability

Nestle Nigeria is projected to achieve a revenue of N1.05 trillion this year, supported by stable naira and ongoing growth, which is encouraging for a company facing accumulating losses due to foreign exchange fluctuations. 

However, indications suggest that the Lagos-based food and beverage company will again report a loss for the entire year of 2024, as noted by investment and research firm Cardinalstone. 

“While we maintain our expectation of a net loss for the full year 2024 (FY’24), we foresee a return to profitability in FY’25, bolstered by diminished foreign exchange volatility and persistent revenue growth,” Cardinalstone analysts mentioned in a recent report. 

The latest financial results from the Nigerian Exchange Group indicate that the company’s loss increased to N184.3 billion in the first nine months of 2024, compared to N43.1 billion during the same period in 2023 due to rising FX losses. 

“For the full year of 2025, we expect continued growth, driven by higher volumes from capacity expansion, moderate price increases, and an expanded distribution network. Consequently, we anticipate full-year 2025 revenue to reach N1.05 trillion,” they added. 

Supporting this outlook, Bolade Agboola, a consumer goods analyst at ChapelHill Denham, stated that Nestle Nigeria is likely to report another after-tax loss in the full-year report for 2024.

“Nestle Nigeria is expected to incur a loss in 2024 primarily due to foreign exchange losses,” she mentioned, adding that there is an anticipation for the naira to stabilize in 2025. 

“There isn’t an expectation for Nestle Nigeria to face significant FX losses during that time, but equity will continue to be negative.” 

Nestle Nigeria’s revenue increased to N665.3 billion in the first nine months of 2024, up from N396.6 billion, largely driven by the food segment, which accounted for 63.8 percent of total revenue, while beverages made up 36.2 percent. 

This growth was propelled by price hikes, increased volumes, and favorable market reception of new products like Maggi Signature Jollof, Maggi Soya Chunks, Nido Milk and Soya, Milo 3-in-1, and Cerelac Rice. 

As of the first nine months of 2024, Nestle Nigeria had invested N39.3 billion in capacity expansion and technological enhancements, significantly boosting its production capabilities. 

However, it’s not all negative for the food and beverages company, as its share price reached N932.7 on Tuesday, up from N830 at the start of the year. The firm’s market capitalization currently stands at N693.6 billion.

An additional examination of the company reveals that other prepayments and prepaid insurance make up the total prepayments for the nine months of 2024. 

The overall prepayments reached N7.41 billion, primarily driven by other prepayments (N5.49 billion), prepaid insurance (N1.13 billion), and prepaid rent (N788.9 million). 

Prepayments are funds paid in advance for anticipated future economic benefits and are categorized into short-term and long-term assets based on the duration covered by the prepayment. 

Cash and cash equivalents, which reflect the value of Nestle Nigeria’s assets that are liquid or can be quickly converted into cash, dropped to N33.2 billion from N152.3 billion. 

The majority of the company’s revenue is generated from local sales, with 99.3 percent coming from Nigeria, while export sales account for 0.7 percent. 

Revenue from Nigeria was N660.6 billion, while export sales totaled N4.69 billion. 

Analysts from Cordros Securities stated that they expect continued revenue growth for the remainder of 2024, driven by price increases across Nestle Nigeria’s product lines, the introduction of innovative and affordable products, and improved distribution capabilities, which should enhance volume. 

Regarding rising costs, the company aims to lower production expenses through energy efficiency initiatives and by replacing imported materials with local alternatives. However, despite these measures, they anticipate that ongoing cost pressures and previously incurred foreign exchange losses will affect Nestle’s earnings for the full year of 2024, according to Cordros Securities analysts.