Nestle Nigeria Plc has disclosed a significant financial downturn in its 2023 financial statement, revealing a loss before tax amounting to N104 billion. This marks a drastic shift from the N71 billion profit reported during the same period in 2022, as disclosed in the document published on the Nigerian Exchange Group (NGX) on Wednesday.

The primary factor contributing to the considerable loss was a foreign exchange loss of N195 billion, a substantial increase from the previous year. This resulted in the erosion of the company’s shareholder funds, turning it from a positive N30.2 billion in 2022 to a negative N78 billion.

The breakdown of Nestle’s financial results for 2023 indicates an increase in revenue to N547.1 billion from N446.8 billion in the preceding year. The gross profit also saw a notable surge, reaching N217.7 billion, a 39.8% year-on-year increase. Operating profit followed suit, rising to N123.7 billion, up by 41.5% compared to the previous year.

However, the surge in net finance costs, amounting to -N227.8 billion, presented a significant challenge, soaring by 1,297% from N16.3 billion in 2022. This contributed to the pre-tax loss of N104 billion and a loss after tax of N79.4 billion.

The company’s total liabilities exceeding its total assets by N78 billion raises concerns about its going concern status. Despite acknowledging the impact of macroeconomic challenges, Nestle expressed confidence that stability would positively influence both the economy and its results.

Nestle has taken proactive measures, including margin and cost management initiatives, to address forex volatility and cost inflation. Despite the negative shareholder funds, the company remains cash flow positive at N49 billion.

In response to the financial challenges, Nestle is anticipated to raise capital, estimated to be over N100 billion, to ensure its continued operational viability. This fresh capital injection is crucial to maintaining the company’s going concern status.

Nestle’s commitment to expansion and improvement remains evident, with investments of N61 billion in the expansion of production lines at its factories in Agbara, Sagamu, and Abaji. Additionally, investments were made in enhancing distribution center operations at Sagamu, Ogun State. Amid economic challenges, Nestle launched five new products and ventured into affordable plant-based nutrition through NIDO Soya.