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End-of-day quote Nigerian Stock Exchange  -  05-15
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05/02Consumer Goods - Inflation Triggers 40% Jump in Raw Materials Cost
04/29Nestlé Nigeria Plc Reports Earnings Results for the First Quarter Ended March 31, 2022
04/29NESTLE NIGERIA : Quarter 1 - financial statement for 2022
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Nestle Nigeria : to Pay Higher Dividend Despite Reduced Profit

03/03/2021 | 04:06am EDT

Nestle Nigeria Plc has decided to dip its hands into its retained profit to pay shareholders higher dividend for the year ended December 31, 2020.

The move is in order to maintain its robust dividend policy.

Nestle Nigeria Plc is well known for rewarding shareholders with good dividend. Although the company's profit fell 14 per cent from N45.683 billion to N39.212 billion, it has recommended a higher dividend payment ratio.

The directors recommend the payment of a final dividend of N35.50 per share having earlier declared an interim dividend of N25, to bring the total dividend to N60.50. The dividend payout amounted to N47.95 billion, which is higher than the N39.212 billion profit recorded in 2020.

The proposed final dividend of N35.50 comprise N24.50 from the after tax profit for the year ended 31 December 2020, and N5.00 and N6 from the after tax retained earnings of the years ended 31 December 2019 and 2018, respectively.

Although Nestle reported increase in top-line, its bottom-line took a beating due to high financing cost, the high inflationary pressure, increased excise duty, value-added tax, and the coronavirus pandemic.

Net financing cost soared by 302 per cent from N938 million to N3.78 billion. The increase in finance cost was primarily due to a multi-fold increase in foreign exchange losses to N1.7 billion from N37.3 million in 19.

Consequently, profit before tax fell from N71.124 billion to N60.638 billion, while profit after tax printed at N39.212 billion, compared with N45.683 billion in 2019.

Commenting on the results, analysts at FSDH Merchant Bank said the company's margins were hit hard during the year with (earnings before interest, tax, depreciation and amortisation (EBITDA) falling 9.2 per cent to N72.2 billion. This led to a 286 basis points (bps) decline in the EBITDA margin to 25.1 per cent in 20.

"The operating and net margin slumped 293 bps and 242 bps, to 22.4 per cent and 13.7 per cent, respectively, in 20. The profit before tax for both the segments declined in 20.

Food segment profit slipped 15.8 per cent to N39.6 billion, while beverage segment profit edged 0.8 per cent lower to N24.8 billion in 2020," the analysts said.

Explaining, its response to the COVID-19, Nestle Nigeria said it engaged with internal and relevant external stakeholders to ensure the safety of its people while keeping its business running to meet the needs of consumers across the country.

"We worked alongside the Manufacturers Association of Nigeria (MAN), Nigeria Employers' Consultative Association (NECA), Association of Food, Beverage and Tobacco Employees (AFBTE), Nigeria Centre for Disease Control (NCDC) and other stakeholders to set up guidelines and necessary precautionary safety measures across all sites while maintaining regular communication channels.

"We engaged with the Governors' Forum, the Ministry of Trade and Investment as well as the OPS to ensure that our operations continued uninterrupted during the period of the lockdowns. All manufacturers in the food and beverage sector were classified as essential services and excluded from the lockdown," it said.

Nestle Nigeria noted that notwithstanding the exemption, it encountered challenges with the availability of key raw and packaging materials including sugar.

"The prices of some materials increased exponentially while access to foreign exchange for the importation of key items became more restricted. Heightened insecurity compelled some of our distributors to shut down. The closure or partial closure of key markets and the lack of patronage at the make-shift markets opened by some state governments also put pressure on the business during the period," it stated.

Copyright This Day. Distributed by AllAfrica Global Media (allAfrica.com)., source News Service English

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Sales 2022 417 B 1 004 M 1 004 M
Net income 2022 52 320 M 126 M 126 M
Net Debt 2022 77 333 M 186 M 186 M
P/E ratio 2022 22,1x
Yield 2022 4,60%
Capitalization 1 110 B 2 672 M 2 672 M
EV / Sales 2022 2,85x
EV / Sales 2023 2,63x
Nbr of Employees 2 288
Free-Float 30,7%
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Mean consensus HOLD
Number of Analysts 6
Last Close Price 1 400,00 NGN
Average target price 1 523,66 NGN
Spread / Average Target 8,83%
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Wassim Elhusseini Chief Executive Officer, MD & Director
Jagdish Kumar Singla Director, Director-Finance & Control
David Ifezulike Chairman
Ricardo Chavez Non-Executive Director, Head-Finance & Control
Jean-Pierre Dawance Head-Technical
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