Nestlé Nigeria Delivers Strong Rebound with Triple-Digit Profit Growth in H1 2025

NESTLÉ NIGERIA PLC Q3 Result – Strong Recovery Sustained as Profit Surges to ₦72.5 Billion, Underscoring Operational Excellence and Strategic Resilience

Executive Summary

Nestlé Nigeria Plc delivered a remarkable performance for the nine months ended 30 September 2025, reflecting a solid recovery and sustained profitability following a challenging 2024. The Company recorded a profit after tax (PAT) of ₦72.48 billion, marking a significant turnaround from the ₦184.27 billion loss reported in the same period of 2024. Revenue expanded 33% year-on-year to ₦884.54 billion, driven by strong domestic demand, effective pricing strategies, and resilient consumer loyalty across key product categories. Improved operational efficiency and effective cost management supported a 63.6% rise in operating profit to ₦181.34 billion, despite inflationary pressures and macroeconomic headwinds. Nestlé’s financial position strengthened during the period, with total assets of ₦847.3 billion, while equity improved significantly on account of retained earnings. The early repayment of a USD 20 million inter-group foreign exchange debt in Q3 2025 further underscores management’s commitment to balance sheet optimization and prudent financial management. This strong performance affirms Nestlé’s strategic focus on margin management, cost efficiency, and sustainable value creation for shareholders and stakeholders alike.

Financial Highlights

₦’000 9M 2025 9M 2024 % Δ YoY

Revenue 884,536,899 665,289,761 +33.0%

Cost of Sales (557,661,594) (458,977,837) +21.5%

Gross Profit 326,875,305 206,311,924 +58.5%

Other Income 953,491 486,938 +95.8%

Marketing & Distribution Expenses (111,758,073) (73,397,087) +52.3%

Administrative Expenses (34,750,020) (22,542,444) +54.2%

Impairment Reversal/(Loss) 22,961 (15,479) N/A

Operating Profit 181,343,663 110,843,852 +63.6%

Finance Income 1,785,024 2,930,478 -39.1%

Finance Cost (55,173,305) (369,158,960) -85.1%

Net Finance Cost (53,388,282) (366,228,482) -85.4%

Profit/(Loss) Before Tax 127,955,382 (255,384,629) +150.1%

Income Tax (Expense)/Credit (55,473,301) 71,113,867 N/A

Profit/(Loss) After Tax 72,482,081 (184,270,762) +139.3%

Basic EPS (₦) 91.44 (232.47) +139.3%

Revenue and Operational Performance

Nestlé recorded ₦884.54 billion in revenue, reflecting strong topline growth of 33% YoY, supported by increased product volumes, strategic price adjustments, and resilient consumer demand despite macroeconomic volatility. The Company maintained its leadership in key product categories including Milo, Maggi, Golden Morn, and Nestlé Pure Life, leveraging its extensive distribution network and consumer trust.

Cost of sales rose by 21.5% to ₦557.66 billion, largely due to inflationary input costs, higher energy expenses, and naira depreciation. However, gross profit margin improved to 37% (vs. 31% in 2024), reflecting efficient cost control, local sourcing initiatives, and improved manufacturing productivity.

Marketing and distribution expenses increased to ₦111.76 billion (+52.3% YoY), driven by strategic investments in brand visibility, route-to-market expansion, and promotional campaigns to support market share growth. Administrative expenses rose by 54.2% to ₦34.75 billion, reflecting inflationary cost adjustments and personnel-related expenses.

Nevertheless, the Company achieved an impressive 63.6% rise in operating profit, demonstrating strong cost discipline and pricing efficiency.

Profitability Analysis

The turnaround in profitability was driven primarily by improved operating efficiency and significantly lower finance costs.

Key profitability metrics:

• Operating Profit Margin: 20.5% (vs. 16.7% in 9M 2024)
• Net Profit Margin: 8.2% (vs. -27.7% in 9M 2024)
• Return on Equity (ROE): Turned positive, supported by earnings recovery and retained profits.

Finance costs fell dramatically by 85.1% to ₦55.17 billion, following strategic debt restructuring and early repayment of foreign currency obligations, which reduced exposure to exchange rate losses. The Company also earned ₦1.78 billion in finance income, reflecting interest earnings on cash balances and short-term placements.

Overall, Nestlé delivered a profit before tax of ₦127.96 billion, compared to a loss of ₦255.38 billion in 2024, underscoring its financial resilience and operational turnaround.

Statement of Financial Position Overview

₦’000 30 Sep 2025 31 Dec 2024 Change

Total Assets 847,296,203 858,698,352 -1.3%

Total Equity (19,700,216) (92,289,917) +78.6%

Total Liabilities 866,996,420 950,988,269 -8.8%

Non-Current Assets 501,396,637 500,395,277 +0.2%

Current Assets 345,899,566 358,303,075 -3.5%

Interpretation:

• Asset base remained stable, reflecting sustained capital investment in property, plant, and equipment (₦461.55 billion).
• Deferred tax assets declined to ₦30.77 billion from ₦70.42 billion, due to utilization following profitability resumption.
• Inventory levels increased to ₦203.36 billion, in line with higher production volumes.
• Trade and other payables rose to ₦285.62 billion, indicating strong supplier relationships and controlled credit terms.
• Equity improved by ₦72.6 billion, driven by retained earnings from current period profit, reversing the deficit trend of 2024.

Liquidity and Capital Structure

Nestlé maintained a healthy liquidity position, with cash and short-term deposits at ₦23.39 billion, up 3.3% from December 2024. The company’s current ratio improved to 0.87x, indicating modest liquidity coverage, while interest-bearing borrowings declined to ₦521.0 billion (from ₦653.7 billion), reflecting reduced leverage.

The early repayment of the USD 20 million inter-group forex debt in Q3 2025 significantly lowered exposure to FX volatility and interest rate risk. The company’s debt-to-equity ratio improved, signaling strengthened balance sheet health and enhanced financial flexibility.

Key Ratios

Ratio 9M 2025 9M 2024 Change

Gross Margin 37.0% 31.0% +6.0pp

Operating Margin 20.5% 16.7% +3.8pp

Net Margin 8.2% -27.7% +35.9pp

ROA 8.5% -21.4% +29.9pp

ROE 12.1% -33.8% +45.9pp

Debt-to-Equity 26.5x 10.3x -16.2x

Strategic Insights

• Profitability Restoration: The Company’s return to profitability since Q4 2024 has been sustained, driven by margin recovery and efficient resource utilization.
• Foreign Exchange Management: Early repayment of FX debt demonstrates prudent financial management and reduced exposure to currency volatility.
• Operational Efficiency: Continued investment in digital transformation and manufacturing automation has enhanced productivity and reduced waste.
• Sustainability Focus: Nestlé remains committed to sustainability initiatives, including local sourcing, waste reduction, and community-based programs.
• Forward Strategy: Management aims to maintain double-digit revenue growth, strengthen cost control, and enhance stakeholder value through operational excellence.

Strengths

• Strong brand equity and diversified product portfolio.
• Improved gross and operating margins.
• Reduced finance costs due to debt restructuring.
• Enhanced liquidity and lower leverage.
• Sustained investment in innovation and sustainability.

Weaknesses

• High input cost pressure amid inflationary environment.
• Currency volatility remains a potential risk to profitability.
• Moderate liquidity coverage ratio compared to peers.

Outlook

Looking ahead, Nestlé Nigeria is well-positioned to sustain its growth momentum into Q4 2025 and beyond. Management’s focus on margin enhancement, innovation, and efficiency is expected to drive further profitability.

The company’s operational strategy — centered on localization, portfolio diversification, and consumer engagement — remains robust against macroeconomic uncertainties. Continued optimization of financing costs and inventory management will be crucial for sustaining cash generation and shareholder returns.

Analyst View

“Nestlé Nigeria Plc’s 9M 2025 results reflect a strong turnaround story marked by revenue resilience, cost efficiency, and effective debt management. The return to profitability and significant improvement in cash flow affirm the company’s sound fundamentals and strategic agility in navigating Nigeria’s volatile operating landscape.”

Conclusion

Nestlé Nigeria Plc’s nine-month 2025 performance underscores a return to sustainable profitability, anchored on robust revenue growth, disciplined cost management, and prudent capital deployment.

With a profit after tax of ₦72.5 billion and a 33% revenue increase, the company has successfully transitioned from recovery to growth mode. The early debt repayment, improved equity position, and consistent strategic execution strengthen Nestlé’s outlook for 2025 and reaffirm its leadership in Nigeria’s fast-moving consumer goods (FMCG) sector.

Nestlé’s unwavering focus on operational excellence, innovation, and value creation continues to position it for long-term success, stability, and growth in a challenging yet opportunity-rich environment.