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Nestle Nigeria Plc: Focus and market peneration strategy underpins profit

by BALA AUGIE

November 14, 2017 | 2:57 am
  |     |     |   Start Conversation

Since making an inroad into the Nigeria’s robust  market 50 years ago, Nestle Nigeria Plc has been meeting the nutritional needs of millions of people.

The consumer goods giant has recorded a record profit growth in the third quarter as its market penetrating product continues to underpin earnings amid  a volatile and tough operating environment.

For the first nine months through September 2017, Nestles’ sales increased by 43 percent to N185.24 billion as against N129.29 bilion the previous year.

The growth in sales was driven by double digit price increases implemented through the second quarter of last year 2016 after last year’s devaluation. Nestles’ margins improved as the company was able to pass on high cost of production to consumers.

Gross margins increased to 40.96 billion in the period under review from 40.10 percent as at September 2016.  Net margin, a measure of efficiency, increased to 12.40 percent from 0.385 percent the previous year.

Gross profits were up 46.11 percent to N75.88 billion in September 2017 from N51.93 billion as at September 2016. As a result of rising inflation and the devaluation of the currency, Nestles’ cost of sales spiked by 41.02 percent to N109.36 billion in September 2017 from N77.55 billion as at September 2016. Nestle is intensifying its cost control strategy as it source 80 percent of its raw material locally.

The Nigerian consumer goods giant’s net income surged by 4643 percent to N22.98 billion in the period under review as against N484.69 million the previous year. Nestle Nigeria, about 64 percent owned by Vevey, Switzerland-based Nestle SA, source 80 percent of its material locally, a strategy that helped the company surmount the headwinds caused by severe dollar shortage.

The company was able to reduce debt in its capital structure as its debt to equity ratio fell to 63.45 percent in September 2017 from 162.53 percent as at September 2016. Total debt ( long and short term) declined by 41.83 percent to N29.19 billion while trade and other payables dipped by 10.51 percent to N57.86 billion as the company continues to meet obligation  to suppliers. With a cash and cash equivalent of N32.15 billion, there are no threats to future dividend payment or expansion plans.

Nestle Nigeria introduces new seasoning cube

Nestle Nigeria Plc, a unit of the world’s biggest food company, has introduced a new seasoning cube into the Nigerian market as the consumer good giant third quarter profit margin improved.

The new seasoning cube- MAGGI NAIJA POT, another addition to the MAGGI family, was developed using familiar and common ingredients to achieve a unique smoky blend.

In his opening remark at the launch, Maurico Alarcon MD/CEO of Nestle Nigeria said “We dedicate ourselves to deeply understanding the needs and preferences of our customers, and then we tailor our products to suit local taste and food cultures.”

Naija Pot is a new seasoning cube in Nigeria full of fish favour with unique combination of natural smoked fish and crayfish to give soups and pottages that bottom pot taste that Nigerians love.

Also speaking at the launch event, the Category Manager, Nestle Nigeria, Mr. Nordine Meguini  said, Naija Pot is a developed by Nigerian chefs, produced in Nigeria with locally known ingredients to enhance the tastes of local cuisine,”

The company sells 100 million cubes of MAGGI a day, according to Alarcon.

USAID, Nestlé, and VEGA Partner to assure Supply of Safe, High Quality Maize

The U.S. Agency for International Development (USAID), Nestlé Nigeria PLC, Volunteers for Economic Growth Alliance (VEGA) and VEGA Member Cultivating New Frontiers in Agriculture (CNFA) have announced a new partnership program: Feed the Future Nigeria and Nestlé Maize Quality Improvement Partnership (M-QIP) to help address the issue of crop contamination prevalent in the cultivation of maize.

This partnership was signed in the presence of Stephen Haykin, Mission Director for USAID Nigeria, Fatih Ermis, Head of Agricultural Services at Nestlé Central and West Africa, Michael Deal, President and CEO of VEGA, Sylvain Roy, President & CEO of VEGA CNFA and the M.V. Tinkat, Director at the Nigerian Federal Ministry of Agriculture.

Under this partnership, USAID ADVANCE, Nestlé and VEGA will work together to build the capacity of farmers and small agricultural businesses in Kaduna State by leveraging the expertise of volunteers. Farmers will learn how to reduce crop contaminants, to help sustainably increase the safety and quality of maize and soybeans, which will lead to improve the health, nutrition and livelihoods in their communities.

The new partnership is expected to reach 20,000 smallholder farmers—including 40 percent women and other agro-industry entrepreneurs within the value chain, leading to an increase in supply of better quality maize and soybean by at least 17,000 metric tons annually helping to improve the livelihoods of these farmers.

Over the next three years, a team of experts and 150 volunteers led by CNFA will design and deliver farmer and aggregator training programs to help reduce aflatoxins and other contaminants in grains, through a train- the trainer approach. More than 200 for-profit private enterprises, such as farm service retailers, will be trained and supported to improve their technologies and management practices.

International experts in mitigation mycotoxin in crops have agreed to provide volunteer advisory services on this project. The team working with Nigerian farmers, agri-business intermediaries and sales agents will also include experts from Purdue University in the U.S. and the Centre for Entrepreneurial Studies and Lifelong Learning in Nigeria.

Emphasizing on the impact of the partnership on the local economy, Mr. Mauricio Alarcon, CEO and Managing Director, Nestlé Nigeria said: “This partnership is in direct line with Nestlé’s purpose of enhancing quality of life and contributing to a healthier future. Our Creating Shared Value approach enables us to build thriving, resilient communities with whom we work, by improving the livelihoods of individuals and families. Today, we locally source more than 80% of our raw material and we are committed to further increase in this regard. We believe that the collaboration with the communities, CNFA, USAID and VEGA will help to improve livlihoods in communities connected to our business activities”.

BALA AUGIE

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by BALA AUGIE

November 14, 2017 | 2:57 am
  |     |     |   Start Conversation

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