CLAIM: A Twitter user claimed Nestlé Nigeria Plc is Nigeria’s highest-earning company as at the first half of 2019.
FALSE: While Nestlé Nigeria Plc is currently Nigeria’s most profitable CONSUMER GOODS company, it is not the most profitable company. There are at least seven companies that reported higher profits than the firm in the first six months of 2019.
FULL TEXT
Two days ago, a social media user claimed Nestlé Nigeria Plc has become the country’s highest-earning company; based on its performance in the first half of 2019.
The claim which was posted on Twitter has garnered over 596 likes and 342 retweets. According to the online user, the company in a bid to expand operations in 2016, invested a total sum of $11 million (N4.1 billion) in a new factory. This had a resultant impact on its 2019 half-year earnings, totalling a sum of $71 million (N26 billion).
VERIFICATION
A report by BusinessDay just might have prompted the claim. This was published on the 6th of August. The report notes that the half-year profit of Nestlé makes it Nigeria’s “most profitable company so far”.
Nestlé Nigeria is a listed company on the Nigeria Stock Exchange (NSE). And as at the close of trading on Monday, September 2, totaled a market capitalisation of N1.05 trillion. This placed the consumer goods firm as the fourth-largest firm on the NSE by market value. Following after are MTN Nigeria Plc, Dangote Cement Plc and Airtel Africa Plc; with market capitalisation of N2.82 trillion, N2.73 trillion and N1.22 trillion, respectively.A look at the Nestlé Nigeria’s half-year 2019 financial results, shows the firm grew its sales by 4.9 percent. This accounts for the shift to N141.9 billion from N135 billion. Similarly, after-tax profit accounted for 22.3 percent increment. The result was an obvious shift to N26.24 billion; in contrast to the N21.45 billion recorded in the comparative period of 2018.
HOW DOES IT WORK?
Listed firms are required to file their unaudited quarterly accounts not later than 30 calendar days after the relevant quarter. This corresponds to Rule 1.1.2 of the NSE Rules for Filing of Accounts and Treatment of Default Filing.
Thirty days from the end of June 2019 is August 30. Consequently, it follows that at the time this report was published, there was room for more companies to file their earnings on the NSE.
What does this mean? It means we can use the figures from the financials of other listed companies to compare against Nestlé’s. This is because the period allowed to file the unaudited financial results has now elapsed.
WHAT WE FOUND…
Interestingly, we found Nestlé Nigeria Plc is indeed the country’s most profitable consumer goods company (half-year results). Consumer goods being the operative word. A breakdown of data gathered from the local bourse revealed Nestlé (with N26.24 billion) displaced companies like Nigerian Breweries Plc and Dangote Sugar Refinery Plc; with N13 billion and N10.9 billion respectively.
However, there are at least 7 companies listed on other sectors of the NSE that reported higher profits than Nestlé Nigeria in the first six months of the year. Among these companies is MTN Nigeria. Nigeria’s largest telecommunications company posted a profit of N98 billion between January and June, 2019.
Additionally, 6 out of 12 Nigerian listed banks posted higher profits. Namely Guaranty Trust Bank, Zenith Bank, United Bank for Africa, First Bank of Nigeria Holdings, Ecobank Transnational Incorporated, and Stanbic IBTC Holdings; posted N99 billion, N88 billion, N56 billion, N31 billion, N59 billion and N36 billion, respectively.
CONCLUSION
While Nestlé Nigeria Plc is Nigeria’s most profitable CONSUMER GOODS company, it is not the most profitable company. There are at least seven companies that reported higher profits than the firm in the first six months of 2019.
