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UPDATE 1-Nestle Nigeria to triple sales to $2.2 bln over 10 yrs
February 22, 2013 / 4:31 PM / in 5 years

UPDATE 1-Nestle Nigeria to triple sales to $2.2 bln over 10 yrs

* To invest around 10 bln naira per year

* Investment to help sales grow

* Shares up over 30 pct this year (Adds detail)

By Chijioke Ohuocha

LAGOS, Feb 22 (Reuters) - Nestle Nigeria aims to triple its sales in Africa’s most populous nation to 350 billion naira ($2.2 bln) in 10 years as the consumer market for food and cereal booms.

The local unit of Swiss company Nestle SA, the world’s biggest food group, will invest 100 billion naira ($635 mln) over the same period to achieve its sales target, chief financial officer Martin Kruegel told Reuters on Friday.

“Our aim is to triple our Nigerian sales over the next 10 years from 117 billion naira,” he said.

On Wednesday, Nestle Nigeria reported a 38 percent in full-year pretax profit to 25 billion naira on strong sales of food and cereals in Africa’s second biggest economy. Gross revenue rose 19 percent to 117 billion naira.

Kruegel said the sales growth was due to increased distribution to rural parts of Nigeria where the bulk of the population lives, while operational savings also helped profit.

This week, Nestle Nigeria commissioned a 5.4 billion naira distribution centre in southwest Nigeria to strengthen its manufacturing operations and increase sales volume.

Nigeria’s economy is expected to grow 6.75 percent this year. Already Africa’s top oil producer, the nation of 160 million people is attracting growing investment interest.

NO STOCK SPLIT

Nestle Nigeria shares have risen more than 30 percent in 10 weeks, partly on hopes of a healthy dividend.

Kruegel noted the company had cut debt to 23 billion naira last year from 32 billion in 2011, adding he expected the trend to continue this year, leaving more cash for dividends.

Nestle announced a full-year dividend of 18.50 naira on Wednesday, paying out 75 percent of 2012 profit.

Its shares traded at 900 naira on Friday, down from a record high at 981 naira on Wednesday before results. Nestle has 792 million shares outstanding giving it a market capitalisation of around 778 billion naira.

Asked whether Nestle would consider splitting its stock to boost liquidity, Kruegel said: “We have no plans for a stock split. Investors do not buy a certain number of shares, they normally invest a certain lump sum amount.” ($1 = 157.50 naira) (Editing by Joe Brock and Dan Lalor)

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