MON, MARCH 02 2020-theG&BJournal- The food and beverages company, NESTLE Nigeria Plc published its Q4-19 and 2019FY results yesterday, showing vastly improved performance overall. The performance resulted in huge dividend payout of N50.3 billion in 2019, a 34% increase from N37.7billion paid in 2018.
The company recorded a gain of 7% in revenue in the year under review from N266,274,62 billion in 2018 to N284,035,255 billion as well as a 19% increase in Profit before tax from N59,750,846 billion in 2018 to N71,123,824 billion in 2019.
Profit after tax rose from N 43,008,026 billion to N45, 683,113 billion.
The company’s Directors recommend the payment of a final dividend of N45.00 (2018:N38.50) per share having earlier declared an interim dividend ofN25.00 (2018: N20:00 from the profit of 2018) on the issued share capital of 792,656,252 (2018:792,656,252) ordinary shares of 50k each.
‘’The proposed final dividend of N45.00 is composed of N32.50 from the profit for the year ended 31 December 2019 and N12.50 from the after tax profit of the year ended 31 December 2016. If the proposed dividend of N45.00 is approved by the shareholders, it will be subject to deduction of withholding tax at the applicable rate,’’ the Board said.
The achieved overall revenue growth halted three consecutive quarters of slower growth and is the highest since Q3-2017, with Food growing at the fastest pace since that same period, while Beverages grew at the fastest pace since Q4-17.
Sequentially, revenue grew 4.7% q/q, bucking the trend of Q4 quarterly declines over the past two years, and was underpinned by improved volume outturn from the Beverages segment (+9.8% q/q).
NESTLE recorded net finance cost of NGN441.98 million (from NGN381.57 million net finance income in Q4-18) in Q4-19 as the company took out a working capital loan facility of NGN10.00 billion at 11.25% interest rate in the period.
Operating cashflow (+28.8% y/y) got a boost from higher net payables (NGN12.35bn) and depreciation (+24.6%).
Compared to Q3-19, EPS was down -16.5% q/q, driven by higher OPEX (+23.5% q/q) and higher effective tax rate of 39.3%, up from 34.3% and 37.1% respectively in Q3 and Q2, resulting from c. NGN3.4 billion taken from PBT from non-deductible expenses and recognition of previously unrecognised tax items.
For the full year, NESTLE’s EPS and EBITDA are above 2018FY at +6.2% and +10.4% respectively.
The stock is trading on 2020E P/E and EV/EBITDA of 16.2x and 10.6x, a premium to emerging market peers 15.0x and 8.8x, respectively.