Nestle Nigeria Plc reported a decline in after-tax profit from N18 billion in the first quarter of last year to N16.2 billion for the same period this year. The interim financial report for the first quarter ended March 2023 revealed that rising interest-bearing debts and interest expenses caused the decline in profits.
Interest-bearing debts increased from less than N77 billion in 2021 to N173 billion at the end of the first quarter, with finance expenses rising by 125.9 percent to N5.3 billion in the first quarter.
The company’s finance income dropped by 58.3 percent to N1.6 billion over the same period, resulting in a net finance cost of N3.7 billion for the quarter, compared to a net finance income of N1.4 billion last year. Cost of finance and marketing and distribution costs were the two main expenses that pressured the company’s earnings in Q1, with the latter growing more than twice ahead of sales revenue.
Although sales revenue grew by 16.1 percent to almost N128 billion at the end of Q1, gross profit grew ahead of sales at 19.5 percent to close at N51.6 billion at the end of March 2023.
The slowdown in input cost strengthened gross profit, which was, however, claimed by the incursion from marketing and distribution cost. Net cash used in operating activities jumped from N10 billion in Q1 of last year to N24.9 billion in Q1 of the current financial year.