We expect Nestle Nigeria’s 9M’20 revenue to dip 0.6% y/y to ₦211.3 billion. Although we expect Revenue from Beverages to sustain its current growth momentum in H1 (+2.5% y/y), we see the company’s food Revenue declining this quarter, following strengthened volume roll-out from the key competition.
Despite sourcing majority of raw materials locally, we estimate a mild decline in gross margin to 42% for 9M’20 from 43% in H1’20, driven by FX pressures.
On the positive side, however, we expect interest expense to decline further in the period as the company’s debt balance remains suppressed. Overall, we forecast PBT and PAT for Nestle at ₦44.7 billion and ₦28.7 billion (-19% y/y, -22% y/y) respectively in 9M’20.