Nestle Nigeria Plc recorded a pre-tax loss of ₦255.38 billion on the back of significant increase in finance cost in the first nine months of 2024, according to a report.
The company in the period saw its pre-tax losses rise by ₦198.73 billion when compared to the same period of 2023, according to Nestle’s unaudited financial statement for the nine months ending September 30, 2024.
This was published on the NGX where pre-tax losses rose from ₦56.65 billion in 2023 to ₦255.38 billion in the current period.
The company noted that the sales in the third quarter of 2024 nearly doubled from ₦81.98 billion in Q3, 2023 to ₦179.31 billion.
The report also noted that net finance cost in Q3, 2024 soared by over 160% from ₦18.33 billion in 2023 to ₦50.62 billion in the period under review.
The losses arising from finance costs were blamed on the foreign exchange fluctuations in the West African country – occasioned by the fall in the value of naira.
This development comes amid economic challenges facing many companies in the country under the President Bola Tinubu-led government.
Finance costs arise from borrowings made by organisations to hold assets or for the purpose of investments or building assets.
Nigeria’s headline inflation rate in September 2024 rose to 32.70%, up from 32.15% in August 2024, marking a 0.55% increase month-on-month, according to the National Bureau of Statistics (NBS).
In August, Oando Plc – runned by one Wale Tinubu, a nephew of President Bola Tinubu, completed a $783 million acquisition of Nigerian Agip Oil Company (NAOC), thus increasing the company’s interest in the different joint venture assets. The acquisition also gave Oando control over 40 oil and gas fields, of which 24 are producing.
While the country was recording the departure of multinational companies like pharmaceutical giant GlaxoSmithKline (GSK), Microsoft, and Diageo (Guinness parent company) due to Nigeria’s harsh economic climate, Oando Plc was generating billions of naira in profit.
Oando —an average-performing oil company before President Tinubu’s government— recorded ₦74 billion profit after tax in the financial year ended 2023, a stark contrast to the previous year when it recorded a loss after tax.
But just a little over one year after Bola Tinubu became president, the company’s share price, which sold at six naira as of September 1, 2023, saw its market value rocket to an all-time high of ₦92.
The valuation elevated Oando to the top 10 most-capitalised companies on the Nigerian stock exchange.
According to a January 2024 report by Peoples Gazette, Tinubu was plotting to transfer Eni’s Nigerian assets to Oando in exchange for Eni’s repossession of Nigeria’s lucrative OPL 245 oil field in partnership with Shell.
The assets transfer was made public in August, by the parties, who said the deal was about $785 million and denied any wrongdoing of Oando cornering juicy deals at the expense of Nigeria’s oil field.
Wale Tinubu and Oando also denied any wrongdoing, asserting that some of the discussions that led to their latest successes took place long before his uncle assumed office.
NIGERIA ECONOMY CRISIS
Last week, a white man was filmed on the street of Lagos, distributing loaves of bread to residents who queued for the free staple, in a development that highlights the extent to which citizens were battered by hunger amid the nation’s worst cost-of-living crisis under President Bola Tinubu-led Nigerian government.
A video that went viral on Monday, showed apparently hungry persons packing what looked like noodles and spaghetti, despite being mixed with dirts in the northwestern state of Kaduna.
A moving trailer conveying the food reportedly capsized, and packs of noodles and spaghetti were scattered on the road, with residents storming the scene and thanking God for providing for them, according to voices behind the video.
The country is facing its worst economic crisis in decades, with skyrocketing inflation, the national currency in free-fall and millions of people struggling to buy food. Only two years ago Africa’s biggest economy, Nigeria is projected to drop to fourth place this year.
The pain is widespread. Unions strike to protest salaries of around $20 a month. People die in stampedes, desperate for free sacks of rice. Hospitals are overrun with women wracked by spasms from calcium deficiencies.
Although, Tinubu increased the minimum wage — after strike action and months-long negotiations with labour unions — from ₦30,000 to ₦70,000, his government has increased spending for officials at a time of nationwide starvation.
For workers earning the new ₦70,000, or $43 per month minimum wage, capricious inflation and naira value have inflicted too much damage for the changes to make any difference in their lives.
The crisis is largely believed to be rooted in two major changes implemented by Tinubu, who took over office 17 months ago; the partial removal of fuel subsidies and the floating of the currency, which together have caused major price rises.
Over a year after Tinubu declared end to fuel subsidy, the fuel price which had been hiked a few times during his first year in office, officially hit the ₦1,000 mark in early October.
This follows after the NNPC Limited withdrew from being middleman between the oil marketers and the Aliko Dangote-owned refinery for the supply of fuel.
Dangote had also urged the president to fully hand off fuel subsidy.
In recent weeks, the nation has suffered an acute fuel scarcity that led some outlets with fuel to sell at exorbitant prices above ₦1,100 per litre while black market prices exceeded ₦1,300.
A nation of entrepreneurs, Nigeria’s more than 200 million citizens are skilled at managing in tough circumstances, without the services states usually provide. They generate their own electricity and source their own water. They take up arms and defend their communities when the armed forces cannot. They negotiate with armed kidnappers when family members are abducted.
But right now, their resourcefulness is being stretched to the limit.
Police and other security agencies clamped down on protests after citizens frustrated by the high cost of living repeatedly took to the streets, demanding that the government do more to help the vulnerable.
In August, Amnesty International accused Nigerian security forces of killing at least 21 protesters during a week of economic hardship protests.
Security forces denied responsibility for deaths during the protests.