Nestlé Nigeria’s financial situation has deteriorated significantly, with a reported loss of ₦176.9 billion in the first half of 2024, marking a 254.51% increase from the previous year’s loss. This steep decline has raised concerns about the company’s solvency and overall financial health. Analysts have attributed the loss primarily to the devaluation of the naira, which led to a substantial revaluation of Nestlé’s foreign currency obligations.
David Adonri, a Board Member at Highcap Securities Limited, highlighted that the scale of the loss threatens the company’s solvency, with negative implications for shareholders. He suggested that injecting fresh equity capital into the company could stabilize its situation and potentially safeguard its future.
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Professor Akpan Ekpo of the University of Uyo also emphasized the broader economic impacts, suggesting that continued losses might force Nestlé to lay off workers to manage fixed costs.
He noted that a decline in consumer purchasing power due to the economic hardship in Nigeria has likely contributed to the company’s troubles. However, Ekpo proposed that government intervention, such as tax breaks or relief in utility payments, could help Nestlé recover in the latter half of 2024.
Overall, while the situation is dire, analysts believe there is a path to recovery, contingent on both internal cost management and external support, particularly from the government.
