Nestle Nigeria Plc has reported a 14% decline in profit for the year ended 31 December 2020, amid a 1% rise in revenue, according to the Annual Report and Financial Statements released by the company.
Revenue rose to N287.08 billion in 2020 from N284.04 billion in 2019.
The cost of sales rose to N167.87 billion from N155.89 billion in 2019 leading to a decline in Gross profit to N199.21 billion in 2020 from N128.15 billion in 2019.
Thus, the gross profit margin stood at 41.52% in 2020 down from 45.12$% in 2019.
Marketing and distribution expenses, and administrative expenses amounted to N43.84 billion and N10.95 billion respectively in 2020.
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The profit before income tax dipped by 15% to N60.64 billion from N71.12 billion in 2019 while the profit for the year declined by 14% to N39.21 billion from N45.68 billion in 2019.
The earnings per share dropped to N49.47 from N57.63 in 2019.
Nestle Nigeria Plc paid income tax of N21.43 billion in 2020 and N25.44 billion in 2019.
The Board of Directors of the Nestle Nigeria Plc proposed a final dividend of N35.50 per 50kobo ordinary share, subject to the approval of shareholders at the company’s Annual General Meeting (an interim dividend of N25.00 was paid) down from the N45.00 final dividend proposed in 2019 (an interim dividend of N25.00 was also paid).
The company has 792,656,000 outstanding shares, thus the total dividend for 2020 (final and interim dividend combined) will amount to N55.49 billion. This implies that Nestle Nigeria dividend payment for 2020 is 41.5% (N16.27 billion) more than its profit for the year.
This payment of dividend which is in excess of its profit resulted in a 36% decline in the shareholder’s equity to N29.3 billion from N45.56 billion in 2019.
“The directors propose a final dividend of N35.50, (N24.50k from the profit after tax for the year ended 31 December 2020, N5.00 and N6.00 from the after tax retained earnings for the year ended 31 December 2019 and 31 December 2018 respectively (2019:N45.00) per share on the issued share capital of 792,656,252 (2019:792,656,252) ordinary shares of 50k each, subject to approval by the shareholders at the Annual General Meeting,” the company wrote in the financial statement.
The total assets of the company rose to N246.18 billion in 2020 from N193.37 billion in 2019, mainly due to an increase in inventories to N52.22 billion from N33.28 billion in 2019; increase in cash and cash equivalents to N58.7 billion from N6.98 billion in 2019.
Similarly, the total liabilities rose to N166.03 billion from N125.54 billion in 2019, mainly due to an increase in loans and borrowings to N33.83 billion from N5.52 billion in 2019; increase in trade and other payables to N116.51 billion from N78.28 billion in 2019.
The equity price of Nestle Nigeria Plc has been flat at N1,450.00 per share since February 1, 2021.
The dividend yield at the current price is 2.41%. Note that the actual yield will be lower when withholding tax and buy charges are taken into consideration.
Ifunanya Ikueze is an Engineer, Safety Professional, Writer, Investor, Entrepreneur and Educator.