Why Nigerian Breweries and Nestlé Are Recovering Faster

• Nigerian Breweries turned a N145 billion loss into a N99 billion profit.
• Nestlé Nigeria posted N104.97 billion in profit for 2025, recovering from a N164.6 billion loss in 2024.

In Q1 2026, both companies extended their recovery. Nigerian Breweries earned N55.9 billion in just three months, surpassing half of its 2025 profit. Nestlé Nigeria earned N38.99 billion, 29% higher than in Q1 2025.

What Went Wrong in 2023 and 2024?

Before the crisis, both companies were operating healthily. Revenue was growing, and consumer demand for products remained strong. However, the real damage came from financial issues, particularly due to the naira devaluation.

Foreign Exchange (FX) Losses:

• Nigerian Breweries experienced N153.3 billion in FX losses in 2023, rising to N257.1 billion in 2024.
• Nestlé Nigeria had N290.7 billion in FX losses in 2024.

Rising Finance Costs:

• Nigerian Breweries saw finance costs surge from N8 billion in 2022 to N257.1 billion in 2024.
• Nestlé Nigeria saw finance costs increase from N233.5 billion in 2023 to N392.8 billion in 2024.

These losses were compounded by high finance costs, which wiped out their profits despite strong operational performance. The companies were still able to grow revenue, but high finance costs made it impossible to convert that revenue into profit.

How They Turned Things Around

The recovery was driven by three main factors:

1. Eliminating FX Losses
   
   • Nigerian Breweries recorded zero FX losses in 2025 and Q1 2026.
   • Nestlé Nigeria reversed FX losses into a small gain in 2025, continuing the trend in Q1 2026.
2. With the FX drag gone, both companies saw their operating profits flow through to the bottom line.
3. Debt Reduction
   
   • Nigerian Breweries reduced its total debt from N341.6 billion in 2023 to N59.7 billion by the end of 2025, and by Q1 2026, it had dropped to N56.1 billion.
   • Nestlé Nigeria reduced its debt from N653.7 billion in 2024 to N476 billion by 2025 and further to N447 billion by Q1 2026.
4. The reduced debt burden lowered their finance costs, allowing more of their operating profits to reach the bottom line.
5. Sustained Revenue Growth
   • Nigerian Breweries grew its revenue from N550.6 billion in 2022 to N1.47 trillion in 2025, driven by price adjustments and strong consumer demand.
   • Nestlé Nigeria grew its revenue by 26% to N1.21 trillion in 2025, with operating profit rising by 34% to N225.4 billion.

Strong Performance in Q1 2026

The positive trends continued into Q1 2026:

• Nigerian Breweries posted N413.02 billion in revenue, an 8% increase from Q1 2025. Profit after tax rose by 25.6% to N55.95 billion.
• Nestlé Nigeria reported N326.1 billion in revenue, with profit after tax of N38.99 billion, a 29% increase from Q1 2025.

Both companies are now growing, while managing costs effectively. Nigerian Breweries also returned to positive operating cash flow of N89.2 billion in Q1 2026, compared to negative cash flow in the prior year.

Stock Price Recovery and Valuation

Investors have reacted positively to the recovery. Nigerian Breweries saw a 135% increase in 2025 and another 13.55% in 2026. Nestlé Nigeria gained 129% in 2025 and surged 59% in 2026.

Both companies are now trading at higher earnings multiples:

• Nigerian Breweries is at 24 times earnings.
• Nestlé Nigeria is at 22 times earnings.

These valuations suggest the market sees long-term growth potential, not just a short-term rebound.

Risks to the Recovery

While the recovery is strong, a few risks remain:

1. FX Exposure
   Both companies still have some foreign-currency debt exposure. A sharp devaluation of the naira could reverse their gains.
2. Consumer Purchasing Power
   Nigeria’s Purchasing Managers Index dropped below 50 points in April 2026, signaling economic slowdown. Rising inflation is squeezing real incomes, which could affect consumer spending.
3. Rising Operating Costs
   Nigerian Breweries saw its cost of sales rise faster than its revenue in Q1 2026. If volume growth doesn’t continue as expected, these rising costs could put pressure on profitability.

Investment Outlook for 2026

Both companies have strong recovery stories and room for growth:

• Nestlé is more attractive at 22 times earnings, with strong cash conversion and lower receivables ratio.
• Nigerian Breweries offers more upside if beer volumes continue to grow, with a cleaner debt position.

Despite being at higher valuations, these companies are pricing in a sustainable recovery. Investors looking for growth in consumer goods may still find them attractive, but they should consider the potential risks, especially with regard to currency fluctuations and consumer spending.

FAQs

• Why did Nigerian Breweries and Nestlé Nigeria lose money in 2023 and 2024?
  Both companies faced heavy foreign exchange losses due to the naira devaluation. Rising finance costs also surged, but their core businesses were still growing.

• What drove the companies’ profitability in 2025?
  The recovery was driven by eliminating FX losses, debt reduction, and strong revenue growth.

• What profit did Nigerian Breweries make in 2025 and Q1 2026?
  Nigerian Breweries posted a N99 billion profit in 2025 and earned N55.95 billion in Q1 2026.