Nigeria’s listed fast-moving consumer goods companies (FMCGs) kicked off 2025 with strong earnings and profit margins, signalling resilience in the face of inflationary pressures.
Top performers included: Nestlé Nigeria, BUA Foods, Nascon Allied Industries Plc, International Breweries Plc, Cadbury Nigeria Plc, Unilever Nigeria Plc, Nigerian Breweries Plc, Champion Breweries Plc, and Nestlé Nigeria Plc.
The firms have not only grown their bottom lines but also generated significant returns for investors.
Read also: FMCGs’ borrowing costs soar on high interest rates
Profit margin is a financial ratio that measures the percentage of profit a company earns from its revenue. Expressed as a percentage, it indicates how much profit the company makes for every dollar of revenue generated.
According to unaudited financial statements filed on the Nigerian Exchange (NGX), BUA Foods’ profit margin rose to 28.32 percent in the first quarter (Q1) of 2025 from 15.63 percent in the same period last year.
It is followed by Nascon, which nearly tripled its profit margins to 18.11 percent, including International Breweries with a 16.3 percent figure.
In Q1, the nine consumer goods surveyed collectively grew their after-tax profits by 311.2 percent to N248.2 billion from N60.3 billion in the previous year, with companies like Cadbury, Champions Breweries, International Breweries, Nestle, and Nigerian Breweries all returning to profitability after a period of losses.
Returns on equity
While profit after tax remains a headline indicator of financial performance, it does not provide the full picture of a company’s profitability. Return on equity (RoE) offers a deeper insight, measuring how effectively a company utilises shareholders’ equity to generate earnings.
For FMCGs, Cadbury reported the highest ROE of 57.9 percent in Q1, which means that the company generated a 57.9 percent return on every N1 of equity invested by shareholders.
BUA Foods Plc followed suit with 22.6 percent returns to its shareholders, making it the second most profitable FMCG company during the quarter.
BUA Foods was known as the most profitable company in 2024, according to a BusinessDay report. This means that the company has continued to show resilience despite economic pressures.
However, Dangote Sugar and Nestle reported negative margins, indicating that they were less efficient in generating profits from shareholders’ investments.
Inventory turnover ratio
In Q1, BUA Foods’ assets generated more sales than peers despite a slight dip.
For every naira invested in assets, BUA Foods generated N2.73 in sales, Nascon and Nigerian Breweries generated asset turnover of N1.54 and N1.39, respectively.
The asset turnover ratio is an efficiency ratio that measures a company’s ability to generate sales from its assets by comparing net sales with average total assets.
The total asset turnover ratio calculates net sales as a percentage of assets to show how sales are generated from each dollar of company assets.
This metric is particularly relevant for FMCGs, which are typically asset-intensive due to their need for large-scale production, warehousing, distribution, and retail infrastructure, analysts say.
Analysts’ view
Uchenna Uzo, professor of marketing at Lagos Business School, said that many consumer goods companies are now better positioned to navigate macroeconomic headwinds, as market conditions have become relatively more stable than last year.
“It’s not that consumers are buying significantly more,” he explained, “but firms have implemented price increases, which have, in some cases, led to a doubling of profits.”
This trend is expected to continue, particularly in the brewery sector, where innovation and the introduction of new products are being used as strategies to attract and retain customers.
However, Uzo cautioned that other consumer goods firms should remain vigilant. “If inflation continues to rise, it could start to erode profits,” he warned.
Read also: Input costs of seven FMCGs jump 121% on FX crunch
The International Monetary Fund (IMF) recently projected that Nigeria’s headline inflation will average 26.5 percent in 2025, following the rebasing of the Consumer Price Index (CPI) by the National Bureau of Statistics (NBS).
Israel Odubola, a Lagos-based research economist, observed that revenue growth across many firms has been largely price-driven. He added that the relative stability of the foreign exchange market and increased local sourcing are helping to reduce cost pressures.
Tunde Abidoye, an analyst at FBNQuest Merchant Bank, said that with the naira more stable than it was last year, companies are less likely to incur significant losses and more likely to report profits.
