Wednesday, March 06, 2019 10.20AM / NSE With Additional Notes From FBNQuest Research
Nestle’s 2018 PBT of N59.8bn is broadly in line with consensus 2018 PBT forecast of N60.6bn. As such, we expect to see very limited adjustments to consensus 2019E earnings forecasts.
Q4 sales grew by 7% y/y to N63.1bn. Nestlé’s gross margin expanded by 156bp y/y to 44.0%. Gross margin also surprised positively (+531bp) relative to our forecast. The company reported a net interest income of N381m compared with a net interest expense of –N263m in Q4 2017.
Q4 PBT and PAT declined by 6% and 8% y/y mainly driven by a 33% y/y spike in opex. A 220bps y/y rise in the effective tax rate to 15.2% also contributed to the wider decline in PAT.
Ytd, Nestle’s shares have performed broadly in line with the NSE ASI. The shares have gained +1.7% ytd vs. the ASI’s +2.4% return.
We rate the stock Underperform. Our estimates are under review.
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