Nestle Nigeria Plc | First Glance: Q2-17; PAT in Line With Expectation

This morning, NESTLE announced Q2-17 PAT of N8.19 billion, (1) compared to a loss of N6.15 billion in Q2-16, (2) below the 8.36 billion reported in Q1-17, and (3) below our N8.51  billion estimate. Compared to Q2-16, the latest result shows the group performed impressively across all reporting lines. But compared to Q1-17, we note that revenue contraction (a deviation from historical trend) and principally, significant surge in financing cost (283.2%), masked a notable positive --recovery of gross margin.

We expect positive reaction to NESTLE’s result which is consistent with the broadly positive expectation for the year. Annualized, the PAT recognized YtD is N33.10 billion, well-above the 2016FY PAT of N7.92 billion.