Event
Nestlé Nigeria Plc (“the Group”) experienced a 67% jump in revenue, reaching N223.49 billion in Q2 2024, compared to N133.80 billion in Q2 2023. This impressive growth was fueled by a 69% rise in the food segment and a 64% increase in the beverage segment. We link the strong performance to the Group’s effective pricing strategy, which helped offset the higher costs stemming from inflationary pressures.
Outlook
We expect sustained revenue growth, primarily driven by price adjustments. However, volumes are likely to remain constrained due to reduced consumer purchasing power. Our full-year 2024 revenue forecast stands at N794.47 billion. Despite the expected revenue gains, rising input costs, higher operating expenses, and ongoing exchange rate volatility are likely to exert considerable pressure on the Group’s profitability.
As a result, we have slightly lowered our fair value estimate to N1,040.26 (previously: N1,055.69). With the current market price at N885.00, this suggests a potential total return of 18%. Therefore, we maintain our HOLD recommendation for the stock.
Please follow the link “Nestle Nigeria Plc – Sustained Revenue Growth and Lower FX Losses Spur Improved Net Loss Position” to view the whole report.
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