•Major companies record 51.9% rise in revenue to N1.6trn
•Profit rises 180% to N218.35bn
•Traceable to macroeconomic stability – CPPE
•Nigerian Breweries attributes it to financial restructuring
CHIGOZIE AMADI
At the backdrop of perceived daunting macroeconomic challenges, major operators in the manufacturing sector of the Nigerian economy may have started witnessing a major turnaround.
Following a challenging 2023-2024 characterised by Naira depreciation and steep inflation some of the country’s major fast moving consumer goods (FMCG) companies and other manufacturing concerns, seem set on a recovery path, showing either a return to profitability or a sharp narrowing of losses.
The indication of recovery is seen in the first quarter 2025 (Q1’25) financial results of eight of the major manufacturers listed on the Nigerian Exchange (NGX).
The companies include Cadbury Nigeria Plc, Nestlé Nigeria Plc, Nigerian Breweries Plc, BUA Foods Plc, Unilever Nigeria Plc, Dangote Sugar Plc, Champion Breweries Plc and International Breweries Plc.
They recorded a combined revenue of N1.6 trillion in Q1’25, representing 51.9 percent increase over the N1.05 trillion recorded in the same period of 2024 (Q1’24).
They also recorded a combined net profit of N218.35 billion in Q1’25, which is a whopping 180 percent increase compared with the net loss of N272.94 billion recorded by the companies in Q1’24.
The combined Q1’25 performance suggests that the companies have adjusted to the challenging economic terrain.
Analysts suggest that the sharp reversal in fortunes of the companies was driven largely by macroeconomic improvements in the form of a relatively stable exchange rate environment and easing inflation.
According to them, the improved performance points to a more stable outlook for the consumer goods sector, although persistent inflation, interest rate hikes, and FX volatility remain major risks.
Companies’ results
BUA Foods reported revenue of N442.1 billion in Q1’25, a 24 percent year-on-year increase compared with N125.3 billion in the previous year, attributed mainly to expanded sales in its flour and rice divisions.
The company’s profit after tax also surged 124 percent to N125.3 billion from N55.9 billion in Q1 2024, despite rising distribution and administrative costs.
Projecting for the rest of the year, Managing Director of BUA Foods, Ayodele Abioye, said: “With a stabilising economy and growing emphasis on food security, we are confident that our unique and integrated business model, strong financial position, and robust execution will continue to enhance our strategic growth and create lasting value for all stakeholders throughout 2025.”
In its Q1’25 financial report, Nestlé Nigeria reported a 61 percent rise in revenue to N294.9 billion from N183.5 billion in Q1’24, while profit after tax stood at N30.2 billion indicating a remarkable 121 percent compared with a net loss of N142.7 billion recorded in Q1’24.
The recovery was driven by improved sales volume across product lines, including Maggi, Milo, and Nescafé, and tighter cost controls.
“Factoring Nestle’s robust pricing power, solid operational execution, and a more stable macroeconomic environment, our model estimates significant improvements in key operating margins in 2025E,” analysts at Cordros Research stated.
Nigerian Breweries in its Q1’25 report posted a revenue of N383.64 billion, up by 68.91% from 227.12 billion revenue reported in Q1’24, while profit after tax rose by 185.53 percent to N44.55 billion from the loss after tax of N52.089 billion reported in Q1’24, sustaining the return to profitability that began in the last quarter of 2024.
Dangote Sugar recorded a 74 percent increase in revenue to N213.93 billion in Q1’25 from N122.95 billion in Q1’24. Though the company remained in the red, but significantly reduced its loss after tax to N23.6 billion in the period under review compared to N68.9 billion in the corresponding period of 2024, pointing to a possible path to recovery.
International Breweries reported N173.6 billion revenue in Q1’25, a 68.2 percent increase on the N103.2 billion posted in Q1’24, while its profit after tax was N29.38 billion, a substantial 148.7 percent improvement compared to a loss of N60.39 billion in the same period last year.
This is primarily attributed to an increase in revenue and a reduction in expenses related to foreign exchange losses.
Unilever Nigeria posted revenue of N47 billion, a 45 percent increase from N32.3 billion in Q1’24, while its profit after tax surged 65.2 percent to N5.55 billion from N3.36 billion in the same period of last year.
The turnaround was also cash-driven, as operating cash flows swung from an outflow of N16.7 billion to an inflow of N9.56 billion, providing liquidity strength and support for its ongoing restructuring.
The revenue of Cadbury Nigeria rose 57 percent to N37.23 billion in Q1’25 from N23.71 billion in Q1’24, while it also posted a net profit of N5.98 billion after losing N7.3 billion in Q1’24.
Similarly, Champion Breweries reported revenue of N8.483 billion, up 93.75 percent from N4.38 billion in Q1’24, while profit after tax surged by 219.51 percent to N985 million, reversing a N824 million loss in Q1’24.
Reflects our financial restructuring – NB
Speaking on the factors responsible for NB’s improved performance, Chairman of the company, Juliet Anammah, said the result reflects the full impact of financial restructuring and cost-saving initiatives implemented as part of the company’s business recovery plan.
“Importantly, net finance expenses dropped by 83 percent – a direct result of the prudent utilisation of proceeds from the 2024 Rights Issue, which were used to reduce foreign currency liabilities and optimise the company’s capital structure.
This substantial reduction in finance costs has materially strengthened the bottom line and enhanced our financial resilience,” she said.
Anammah further stated: “In Q1, we increased volume. So, in terms of top line revenue, sales volume and value played major roles. Tight management of raw materials cost also helped us, if we look at it from the cost of goods sold perspective. In terms of cost efficiencies, we were very tight on cost management.
“We had identified certain assets, and promised ourselves that some of these assets will be held steady without powering them up. So, reducing those lines also helps in cost management. All in all, it reflected in our operating profit for the year.
“Last year, the finance line made up of interest rate plus losses as a result of FX was the biggest line item on the Profit and Loss account statement.
“Usually, the biggest line item on the P&L is operating expenditure. Once you pass the cost of goods sold, which is the cost of raw materials, plus converting them using your factory production lines, the next big item on the P&L is your operating expenditure. You shouldn’t have your finance expenses running into just the losses from devaluation.
“In some companies in our sector, it took 17% to 29% of the revenue. Those were extremely high numbers.
“So, the clean-out really helped to drop both interest expenditure as well as losses coming from FX. What has worked for us as we recover from Q4 last year going into Q1 this year will be sustained.”
Traceable to macroeconomic stability – CPPE
In his comment, Chief Executive Officer of Centre for the Promotion of Private Enterprise CPPE, Dr Muda Yusuf, attributed the relative stability in the foreign exchange (FX) and improvement in the macroeconomic management as major reasons for the recovery.
His words: “The major factor in this change or this improvement is the exchange rate. What took many of these companies into a loss position last year was the exchange rate shock. The currency risk crystallized in a very big way. Because many of these companies have foreign exchange exposure, in terms of their liabilities, some in terms of the credits or funds that they have borrowed and all of that. So the depreciation escalated their foreign exchange liabilities and obligations.
“That is what created the shock and took many of those companies into a loss position. That was also part of the reason some of those multinational companies had to leave the country because they couldn’t just sustain their businesses in the current foreign exchange regime. But after that shock, these companies have been recovering gradually. So the improvement in their financial statements that we are seeing is a reflection of the recovery.
“In the last ten months or so, we have seen minimum volatility in the exchange rate, we have seen some relative stability generally – both in the exchange rate and also in energy prices. So essentially this is what has been responsible for the improvement. They have all gotten over the foreign exchange shock or the currency shock.
“And of course they suffered huge losses, and are now on the path of recovery, although many of them are still posting very high financing costs because of the high interest rate situation. That is still a burden. If you look at the books of many of them, finance cost is still extremely very high. But the exchange rate situation has a bit normalized in a way. So that for me, I think, is what has happened. And generally because of the stability in forex, the economic situation at the macro level also seems to have improved somewhat over the last one year.
“As a result of the stability in the forex market and the fact that the CBN has been able to offset all the outstanding foreign exchange obligations, which were inherited from the past administration, and also have a much better capacity now, that is the CBN, to periodically intervene in the market to ensure stability. So the confidence level too has become somewhat elevated in the last ten months or so.
“So basically this, for me, is the main factor that has been responsible for this turn around with respect to many of these companies.
“Many of them had high foreign exchange exposure in terms of their financing and in terms of their procurement because they import a whole lot of things.
“And some of them also have some debt obligations in foreign currency. So this is what has changed dynamics for most of them.”
Backward integration a factor – NACCIMA
Also reacting, President of the Nigerian Chamber of Commerce, Industry, Mines and Agriculture (NACCIMA), Dele Oye, stated: “The improvement could be traced to backwards integration, local sourcing of raw materials in Nigeria.
“Demand for sugar elastic and is also used by almost all the industries as by-product for manufacturing.”
