Market News

BY Wasiu Alli

Consumer goods firms are beginning to heave a sigh of relief as inflationary pressures are cooling and the Nigerian naira is bouncing back, maintaining firmness after shedding 41 percent of its value last year.

This is good news for the Fast Moving Consumer Goods (FMCG) sector that has been saddled with a plethora of issues, including foreign exchange volatility, insecurity in food-producing states that pressured domestic input prices, and unfavourable government policies.

These issues culminated in significant margin erosion for FMCGs in the last two years, but the volatility in the FX market is subsiding, reducing the risk of FX losses and weaker equity for the sector while bolstering domestic consumption.

Data from the National Bureau of Statistics (NBS) show that Nigeria’s inflation tumbled now reading at 23.18 percent in February after an average of 32 percent last year, leaving policymakers with no choice than to aggressively hike monetary policy rate which now stood at record high of 27.5 percent.

This is as Nigeria’s naira climbed the most against the dollar in almost a month at N1,531.25 per dollar on Monday, according to CBN data, a 0.4 percent or N5.57 gain from N1,536.82/$1 last Friday.

“We anticipate a sector-wide recovery in 2025,” analysts at CardinalStone research said. “This rebound will be supported by improving macroeconomic conditions, which should boost household consumption and ease input cost pressures.”

“Inflation is projected to trend downward in the medium term, driven by moderating PMS and AGO prices on the back of a decline in global crude oil prices and an improved supply of refined products domestically.”

The analysts said product innovation and expanded distribution networks by players in the sector are expected to boost sales growth and cascade to further bottom-line support.

BusinessDay selected and analysed five leading consumer goods such as BUA Foods, Unilever, Nestle, Dangote Sugar and Nigerian Breweries to show the companies’ recovery via data from their books.

BUA Foods

BUA Foods delivered its highest ever annual revenue of N1.53 trillion since listing on the Nigerian Exchange in 2021 last year. This is more than double the N729.4 billion recorded in 2023, according to the company’s audited financial statements for the year ended December 31, 2024.

The historic numbers show the company is, at a very fast pace, recovering from the shocks of the government policies in 2023 that soared inflation and led to record exchange rate losses due to the devaluation of the naira.

The report shows that the growth was driven by an increased demand for the company’s core products such as sugar, flour, and pasta, as well as increased production capacity, strategic pricing, and deeper market penetration across Nigeria.

Despite recording a N178 billion exchange loss due to currency depreciation, the company’s pre-tax profit rose by 162.9 percent to N284.3 billion from N108 billion, while after-tax profit grew by 137.3 percent to N265.99 billion from N112 billion, strengthening BUA Foods’ position as one of Nigeria’s most profitable consumer goods companies in 2024.

Earnings Per Share (EPS) also climbed 145.3 percent to N15.27, underscoring the company’s ability to drive value creation for shareholders.

Ayodele Abioye, managing director of BUA Foods, said the results underscored the company’s ability to navigate challenges with agility and its resilience, expressing optimism on the back of stable macroeconomic conditions.

“Looking ahead with optimism, coupled with stability in the macro-economic environment, we would continue to focus our operations and strategic investment initiatives towards addressing food supply challenges,” he said.

Dangote Sugar

Dangote Sugar Refinery Plc saw its after-loss deepen further after higher production costs and FX losses in 2024 dealt a blow on the company’s financials.

The after-tax loss deepened to N192.6 billion in 2024 from N73.8 billion in 2023, highlighting the impact of the naira volatility.

“Dangote Sugar Refinery Plc reported a net loss of N192.62 billion in its FY’24 audited results, primarily due to rising production costs and significant foreign exchange losses,” analysts at Cardinalstone said in a note.

The firm’s production costs increased by 79 percent to N634.6 billion driven by raw material expenses which stood at N546.1 billion, direct overheads stood at N52.02 billion, and freight expenses of N18.3 billion, direct labour cost of N9.13 billion and depreciation of N9.05 billion.

But analysts are betting on the now stable naira and slowing inflationary pressures for the biggest sugar refiner to turn the tide of losses for the past two years and return to profitability.

Unilever Nigeria Plc

Unilever Nigeria has continued to record steady profit for the past four years after posting a N4 billion loss in 2020, highlighting its resilience even in the face of harsh economic conditions.

The consumer goods maker made a profit after tax of N15.1 billion in 2024 down from N8.4 billion in the previous year despite high inflationary environment and exchange rate fluctuation.

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The company delivered its highest revenue in at least five years, hitting N149.5 billion from 103.9 billion a year earlier, signalling strong domestic sales.

The robust revenue growth was linked to the improvement in sales of the company’s nutrition segment which grew 46.8 percent to N92.83 billion. Similarly, the personal care, and beauty & wellbeing products recorded upticks of 32.8 percent YoY and 72.5 percent YoY to settle at N43.97 billion and N12.95 billion, respectively.

Cumulatively, the nutrition segment contributed 62.0 percent to total revenue, while personal care and beauty & wellbeing contributed 29.4 percent and 8.6 percent, respectively, to total revenue for the period.

“For Unilever, nutrition is still their biggest cash cow,” said Nathaniel Disu, an investment research analyst at Afrinvest West Africa.

Disu noted that Unilever divested their home care business segment in 2023 to focus more on their core revenue drivers which has seen their “profit after tax grew that much because the losses from that business segment, they’re still trying to kind of ease it out of their balance sheet.”

“And it’s no surprise that I’ve seen them put more money in their marketing.”

Nestlé Nigeria

While Nestle Nigeria’s profit dipped in the full year 2024 to N164.5 billion from N79.4 billion a year before, its revenue grew by 75 percent from N547.1 billion to N958.8 billion, driven by strong domestic sales.

The revenue surge became possible as the company returned to profitability in the three months to December, with posting a profit after tax of N19.676 billion, a sharp recovery from the N36.406 billion loss recorded in Q4 2023.

But revenue is expected to rise to N1.05 trillion this year on the back of a firm naira and sustained growth, a boost for a company whose losses have continued to pile up as a result of foreign exchange volatility.

“For the full year of 2025, we anticipate continued growth momentum, driven by increased volumes from capacity expansion, moderate price adjustments, and an expanded distribution network. As a result, we forecast full-year 2025 revenue to reach N1.05 trillion,” CardinalStone analysts said in a recent note.

Nigerian Breweries

Nigerian Breweries saw its revenue grow by 79 percent, hitting N1.07 trillion in 2024 from N599.5 billion recorded the year earlier, the company’s audited financials revealed.

However, the country’s biggest brewer saw an increase in loss after tax to N144.33 billion in 2024 from N105.76 billion the previous year, underscoring the impact of the naira devaluation and inflationary pressures that have dealt a blow on the firm’s profitability.

“Economic pressures, including high inflation rates and the devaluation of the naira, drove up operational costs and the price of raw materials,” the company said in its review of operations.

“Despite these hurdles, the company demonstrated resilience through strategic adaptations including a recapitalisation of the company through a Rights Issue, increased local sourcing, innovation, and further diversification through the completion of the acquisition of majority stakes in Distell Wines and Spirits Nigeria Limited.”

Juliet Anammah, chair of the Board of Directors said there is an anticipation of a positive outlook for the economy and by extension the company.

“Stability in economic policies and declining interest rates are expected to create a more favorable investment landscape. Lower borrowing costs will unlock access to financing, empowering companies to scale operations, fund capital projects, and accelerate growth,” Anammah said.