Nestlé Nigeria Plc has taken a significant step in managing its financial obligations by making an early repayment of $20 million in inter-group foreign exchange debt. This proactive move comes as the company faces ongoing economic challenges such as currency devaluation, inflation, and increasing finance costs, which have impacted its financial performance in the past year. The repayment, made ahead of schedule, highlights Nestlé Nigeria’s strong financial discipline and strategic decision-making in navigating a turbulent economic environment.
Commitment to Reducing Currency Volatility Exposure
Wassim Elhusseini, the Managing Director and Chief Executive Officer of Nestlé Nigeria, commented on the development, emphasizing the company’s dedication to mitigating risks tied to currency fluctuations. “Our ability to make an early payment of $20m on our forex obligations underscores the strength of our financial discipline and our commitment to reducing exposure to currency volatility. Despite the economic headwinds, we continue to make strategic investments and optimise our operations to ensure long-term value creation for our stakeholders,” Elhusseini said.
The move reflects Nestlé Nigeria’s ongoing efforts to stabilize its financial position and improve its resilience amid challenging macroeconomic conditions. The early repayment is expected to reduce the company’s exposure to foreign exchange risk, which has been a significant concern due to the depreciation of the naira and inflationary pressures.
Strong Financial Performance in the Face of Adversity
In addition to the debt repayment, Nestlé Nigeria has recently reported a positive turnaround in its financial performance. The company posted a profit after tax of N19.7 billion in the fourth quarter of 2024, marking a significant recovery from a loss of N36.4 billion in the same period of 2023. This strong performance was driven by a 95 percent increase in total revenue, which reached N293.5 billion, as well as a 77.1 percent growth in operating profit to N57 billion.
For the full year 2024, Nestlé Nigeria’s revenue surged by 75.2 percent to N958.8 billion, with operating profit rising by 35.6 percent to N167.9 billion. However, the company reported a total comprehensive loss of N14.6 billion for the year, largely attributed to high finance costs stemming from the depreciation of the naira.
Despite the loss, Nestlé Nigeria has remained committed to investing in its operations. Since 2023, the company has invested N132 billion, with N72 billion of that amount allocated in 2024 alone, aimed at expanding its capacity and improving operational efficiency. Additionally, the company has increased its workforce by eight percent to support its growth initiatives.
Strengthening Financial Position with Strategic Investments
The early repayment of the foreign exchange debt is expected to improve Nestlé Nigeria’s financial position by lowering interest expenses and reducing forex-related risks. This move is aligned with the company’s long-term strategy of strengthening its balance sheet and enhancing its operational efficiency.
Elhusseini reaffirmed the company’s commitment to navigating the ongoing economic challenges while maintaining a focus on growth. “Our investments in capacity expansion, workforce development, and product innovation will position us for sustained growth. We remain focused on navigating economic challenges while continuing to deliver value to our consumers and shareholders,” he added.
Chairman’s Perspective on Forex Loans
Gbenga Oyebode, the chairman of Nestlé Nigeria Plc, also provided insights into the company’s reliance on foreign exchange loans from its parent company, Nestlé S.A. in Switzerland. He stated that these loans were necessary to ensure the continued operation of the company, underscoring the importance of these financial instruments in keeping the business running smoothly amid fluctuating exchange rates.
Looking Ahead: A Focus on Sustainability and Growth
As Nestlé Nigeria continues to address the challenges of currency volatility and rising costs, its strategic investments in capacity building and operational optimization position the company for long-term success. The company’s ability to adapt and its commitment to strengthening its financial foundation provide a strong platform for continued growth and value creation for its stakeholders. With a clear focus on improving operational efficiency, expanding its workforce, and driving product innovation, Nestlé Nigeria aims to remain resilient in the face of economic uncertainties and deliver sustainable growth moving forward.
