Nestle Nigeria Plc reported on Wednesday improved performance for the financial year ended December 31, 2015 despite the challenging operating environment. The company posted a revenue of N151.272 billion, compared to N143.329 billion in 2014. Gross profit stood at N67.346 billion, up from N61.22 billion. Marketing and distribution expenses followed the same upward trend, rising from N24.7 billion to N25.9 billion, while administrative expenses rose from N7.34 billion to N7.693 billion.

However, finance cost fell from N5.305 billion to N4.868 billion. The drop in finance cost bolstered the bottom-line of Nestle Nigeria, which ended the year with a profit before tax of N29.322 billion, up from N24.445 billion. Profit after tax grew from N22.236 billion to N23.736 billion.
The company announced a final dividend of N19.00 per share, bringing the total dividend to N29.00. Shareholders had earlier received an interim dividend of N10.00 per share.

Commenting on the fourth quarter(Q4) results, analysts at FBN Capital Limited said . Nestle’s topline recovery which began in Q2 2015 has been sustained for three consecutive quarters.

“According to management statements, sales were driven by an eight per cent year-on-year (y/y ) growth in the foods business. We believe this is helped by continued product reformulation, an improved sales distribution network and relatively higher switching costs for the food category. Our channel checks continue to reveal flattish y/y pricing for key Nestle products. As such, we believe unit volumes of around 10 per cent were the primary driver for the top-line trend. In addition to topline growth, a gross margin expansion of 305 basis point (bps) y/y to 44.7 per cent and an 80 per cent y/y decline in net finance charges boosted PBT growth which was up 99 per cent y/y. We note that the strong PBT growth is helped by easy comparables given an unusually weak Q4 2014. We note that Nestle’s low reliance on imported raw materials continues to keep gross margin at healthy levels. We await management’s comments on all of these lines,” they said.

Looking ahead, FBN said: “We believe consumer goods firms will struggle given the continued macroeconomic headwinds. Although the security in the north east is a lot better today, a combination of a higher inflationary environment, slower economic growth and lower disposable income would be major themes in 2016.”