Nestle grows profit on 172.69% surge in Finance cost

Nestle, the leading Fast Moving Consumer Goods Company, has recorded a marginal increase in profit by 2% on 172.69% finance cost increase.

The FMCG’s profit grew to N40.04 billion in 2021 from N39.21 billion in the previous year, due to a surge in expenses such as finance cost which increased to N12.08 billion from N4.43 billion in the comparable period.

Although revenue grew by 22.55% to N351.82 billion from N287.08 billion, expenses incurred by the company gulped a larger chunk translating to a minimal increase in profit.

Nestle’s revenue comprises N208.29 billion from sales of food and N143.53 billion from the sales of beverages.

Nevertheless, an increase in finance income by 207.57% to N1.99 billion from N646.54 million in the comparable period attributed to the increase in profit.

The leading FMCG company however saw a 31.05% increase in Cost of sales to N219.99 billion from N167.87 billion.

Their share price increased by 1.41% to N1435 on Tuesday.

Its gross profit also increased by 10.59% to N131.84 billion from N119.21 billion in the period under review.

Nestle’s gross profit margin, which shows the percentage of the amount it retained after deducting direct cost, increased to 62.53% from 58.47% last year.

However, its profit margin -which records how much profit is generated as a percentage of revenue, therefore indicating how efficient the company is at converting sales into actual profit- reduced to 11% in 2021 compared to 13% last year.

Total assets grew 26.02% to N310.24 billion from N246.18 billion in the comparable period. Similarly, liabilities increased by 33.18% to N288.86 billion from N216.89 billion.

Analysis conducted shows that net cash generated from operating activities increased to N64.44 billion from N63.79 billion in the comparable periods.

Likewise, net cash flows used in investing activities increased to N18.11 billion from N15.72 billion while Net cash flows used in financing activities resulted in N4.52 billion.

Earning per share also increased to N50.52 from N49.47 last year.

Its financial statement shows that 98.49% of its revenue comes from its sales in Nigeria while the rest is earned from Ivory Coast, Ghana and other countries.