Naira stability sparks hope as Nigerian FMCG sector sees dramatic profit increase

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Nigeria’s Fast-Moving Consumer Goods (FMCG) sector is experiencing a remarkable turnaround, driven by the relative stability of the naira in the first quarter. Several companies in the sector have achieved over 100% profit growth in their Q1 operations, a significant improvement from the challenges posed by the highly volatile exchange rate in previous years.

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The stable exchange rate has led to improved financial health for these companies, with many reporting a return to profitability, notable reductions in FX-related losses, and strong revenue growth. For instance, Cadbury Nigeria Plc reported a pre-tax profit of N8.5 billion in Q1 2025, reversing a pre-tax loss of N10.4 billion in the same period last year. The company’s revenue surged 57.1% year-on-year to N37.2 billion, driven by robust domestic sales.

Similarly, Nestlé Nigeria Plc returned a pre-tax profit of N51.15 billion in Q1 2025, compared to a loss of N196.09 billion in Q1 2024. The company’s finance costs were drastically reduced by 89.3% to N23.47 billion, largely due to a sharp fall in FX-related expenses.

Other companies that have reported significant improvements include NASCON Allied Industries Plc, Dangote Sugar Refinery Plc, and International Breweries Plc. These companies have benefitted from the stable exchange rate, which has enabled them to better manage their cost structures, make more accurate forecasts, and allocate capital more efficiently.

According to Charles Abuede, research analyst at Cowry Asset Management Limited, “Looking ahead to 2025, we anticipate some relative stability in the FX market, which should further strengthen the bottom line of these companies.” Patric Ajudua, President of the New Dimension Shareholder Association of Nigeria, attributed the sector’s recovery to exchange rate stability, debt-to-equity conversions, capital injections, and improved cost control measures.

The Q1 2025 performance is seen as a sign of relief and a potential signal that the worst of the currency-induced pressure may be easing, provided the current macroeconomic direction is sustained. While challenges remain, including negative equity for some companies, the first-quarter results offer cautious optimism that the worst of the FX-induced earnings crisis may be over.

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