December 22, (THEWILL) — Nestlé Nigeria Plc is set to close its 2025 operations on a bullish note, the first time after the foremost consumer goods firm had posted losses in the previous two years: N79.47 billion in 2023; N164.6 billion in 2024.
The journey on the loss expressway occurred from the massive devaluation of the naira in mid-2023 which wiped off over 70 percent value of the local currency.
The Central Bank of Nigeria (CBN) had on June 14, 2023, announced the unification of the multiple exchange windows of the forex market. This resulted in significant depreciation of the naira which had traded N465/$1 prior to the announcement as against its current value of about N1,500/$1.
Nestlé Nigeria Plc reported a strong rebound in its third quarter (Q3) 2025 results, posting a pre-tax profit of N39.6 billion, a sharp turnaround from the N2.9 billion loss recorded in the same quarter of 2024.
This took its nine-month pre-tax profit to N127.96 billion, compared to a loss of N255.38 billion recorded in the same period in 2024.
According to the unaudited results, the multinational food giant also posted healthy revenue growth across its two core segments.
The Q3 2025 revenue grew by 17.5 percent YoY to N303.4 billion, up from N258.3 billion in Q3 2024. This growth was largely driven by strong performance in the Food segment (Maggi, Golden Morn, Cerelac) and Beverages (Milo, Nescafé, Nestlé Pure Life).
These flagship brands continued to enjoy solid consumer loyalty, allowing Nestlé to implement price increases without significant volume erosion.
For the 9-month period (Jan–Sep 2025), revenue rose by 32.9 percent YoY to N884.5 billion, compared to N665.3 billion in 2024.
Thu,s pricing power, coupled with better operational leverage, saw gross profit rise 29 percent YoY to N101.92 billion, ahead of revenue growth. In the same growth trajectory, the gross margin expanded to 33.6 percent from 30.6 percent, reflecting disciplined cost management, production efficiency, and favorable product mix.
The result showed that higher operating costs, particularly in marketing, distribution, and administrative expenses, moderated overall profitability at the operating level. Nestlé had to contend with rising logistics costs, increased promotional activity, and FX-driven cost inflation.
As a result, operating profit rose 6.6 percent to N50.90 billion, but operating margin slipped to 16.8 percent, down from 18.5 percent in Q3 2024, highlighting the pressure on margins despite strong top-line growth.
The company noted that revenue growth and gross margin expansion were the main drivers of performance, while rising operating costs acted as a brake on the full earnings potential for the quarter.
The biggest earnings driver was the massive drop in net finance costs, down 77.6 percent to N11.34 billion from N50.62 billion a year earlier. This was primarily due to:
reduced exposure to FX-denominated loans; lower exchange losses on foreign payables, and strategic repayments of high-interest borrowings.
On the balance sheet side, the firm recorded a total assets stood at N847.30 billion, slightly down from N858.70 billion as at December 2024, largely due to the repayment, especially advance payment to suppliers.
Total liabilities declined 8.8 percent to N867.00 billion, driven by a N132.7 billion (20.3 percent) drop in interest-bearing loans and borrowings, reflecting management’s focus on deleveraging and restructuring debt.
Despite still being in negative equity territory, Nestlé’s total equity improved significantly to -N19.70 billion, up from -N92.29 billion at the start of the year signalling improved retained earnings from recent profits.
Nestlé shows a positive sign of rebuilding profitability, liquidity, and equity thus laying the foundation for stronger FY results as 2025 gradually winds down.
MAN’s worries
While manufacturers have expressed optimism about Nigeria’s economic prospects heading into the fourth quarter of 2025, the realities on the ground tell a more complicated story.
Persistent inflation, rising production costs, foreign exchange volatility, and weak consumer purchasing power continue to test the resilience of local producers—casting doubt on how far this “brighter outlook” can truly go.
The Manufacturers Association of Nigeria (MAN) had last October hinted at renewed confidence, citing gradual FX stability, improvements in power supply, and stronger policy coordination. However, industry data paints a mixed picture.
Capacity utilisation remains below pre-pandemic levels, input costs have risen by over 40 percent in the past year, and imported raw materials are still priced at record highs due to lingering FX access constraints.
For many firms, optimism has become more of a coping strategy than a reflection of actual recovery. Several sectors—from fast-moving consumer goods to building materials—are grappling with subdued demand as household budgets shrink under inflation now hovering above 30 percent. The rising cost of logistics and energy, driven by higher diesel and petrol prices, continues to erode profit margins even among larger manufacturers.
Despite small gains from local sourcing initiatives, structural challenges such as insecurity, infrastructure decay, and regulatory uncertainty still limit the scalability of local production. Without decisive policy support especially around tax reforms, credit access, and stable FX liquidity industry experts warn that the current optimism could quickly fade into fatigue.
In essence, while the manufacturing sector’s hopeful tone signals resilience, the underlying fundamentals remain fragile. Until production costs ease, purchasing power improves, and FX markets stabilize sustainably, Nigeria’s manufacturing “rebound” may remain more aspirational than actual.
An earlier review of 10 major manufacturing firms’ half-year (H1) 2025 financials revealed a widespread decline in reported finance costs compared to H1 2024. Firms that once bore heavy borrowing burdens are now reporting lower interest expenses, opening room for margin recovery and strategic investments. For Nestlé Nigeria the H1 2025 figure was N43.16 billion against N318.11 billion in 2024, an improvement of 86.45 percent.
Analysts believe that the outlook for the full year hinges on macro pressures — from inflation to foreign exchange to growth in Nigeria’s economy, among others.
Using the H1 base and adjusting for seasonal borrowing needs, full-year finance costs for major manufacturing firms, including Nestlé’s Nigeria, is estimated to shrink by 50 percent –80 percent relative to 2024, barring FX shocks or heavy new borrowing.
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
