Nigeria’s biggest food company will dip into the reserve of parts of the profits made in 2019 and 2018 to fund its planned dividend for shareholders as the profit it made last year might not be adequate to meet that purpose and lay up more cash for the future at the same time.
Nestlé hopes to pay shareholders “a final dividend of N35.50 per 50 kobo ordinary share (composed of N24.50 from the after-tax profit for the year ended 31 December 2020, and N5.00 and N6.00 from the after tax retained earnings of the years ended 31 December 2019 and 2018, respectively), the grocery maker said in a statement published by the Nigerian Stocks Exchange (NSE) on Monday.
That implies Nestlé will move N3.963 billion from its 2019 earnings and N4.756 billion from those of 2018, and add them to the N27.347 billion from last year’s profit to fund its dividend plan.
It also leaves the company’s shareholders fund at N29.297 billion, more than one third lower than the N45.558 billion reported for 2019, affirming the pressure on the company capacity to sustain increased shareholder value in the years ahead.
Nigeria’s biggest food company has reported a 14 per cent slide or a drop of N6.471 billion in the bottom line for 2020 financial year, underscoring the enormity of the escalating costs of raw and packaging materials, and the rising value of changes in finished goods and products in process on the food processing industry as the pandemic weighs.
The stumble in Nestlé Nigeria Plc profit for last year came at a time when total sales were rather up, even though marginally, by 1.1 per cent at N287.084 billion, which compares with the N284.035 billion seen in 2019.
Earnings were further capped by a more-than-triple surge in how much the grocery maker spent of paying interest on short-term loans, which came to N3.780 billion from N938.222 million, the audited financial statements of the company showed on Monday.
The Nigerian operation of the Vevey-based Nestlé S.A, itself the world’s largest food company by Forbes estimate posted a pre-tax profit of N60.638 billion, 17.3 per cent or N10.485 billion weaker than that of the preceding year.
Profit for the year eased N6.471 billion to N39.212 billion from N45.683 billion.
Nestlé’s performance in the equity market has been a sail through choppy waters in the last one year, with the stock returning 28.3 per cent, according to equity data analysis firm Simply Wall Street.
That compares to the 31.5 per cent returned by the Nigerian food industry, where it holds the biggest market share.
Shares in Nestlé traded at 13:11 WAT in Lagos on Monday at N1,450 per unit, recording no change.
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