FMCG Firms See Profits Surge by Over 100% Amid Naira Stability in Q1 2025
The first quarter of 2025 has brought significant financial relief for several fast-moving consumer goods (FMCG) firms in Nigeria, as the relative stability of the naira boosts their profitability. Many companies within the sector have reported over 100% profit growth compared to the same period last year, following years of grappling with currency volatility, foreign exchange losses, and rising input costs. This shift is attributed to a more stable exchange rate, improved monetary policies, and better foreign exchange liquidity, which have allowed firms to regain profitability and better manage costs.
For years, FMCG companies struggled with the negative impacts of a volatile naira, which resulted in increased costs for imported raw materials, FX-related losses, and operational challenges. However, the recent improvement in exchange rate stability has had a noticeable impact on the financial health of firms like Cadbury Nigeria, Nestlé Nigeria, and NASCON Allied Industries. Cadbury, for instance, reported a pre-tax profit of N8.5 billion in Q1 2025, a remarkable turnaround from a loss in the same period last year, driven by strong domestic sales and a rise in revenue.
Nestlé also experienced a dramatic recovery, posting a pre-tax profit of N51.15 billion, compared to a massive loss in Q1 2024. The company significantly reduced its finance costs, largely due to a reduction in FX-related expenses. This stabilization in the currency environment has allowed firms to reduce their FX losses, increase domestic sales, and rebuild investor confidence, leading to a surge in their stock prices. Similarly, NASCON reported a 515% increase in pre-tax profit, highlighting the positive effects of improved currency stability.
Despite some companies like Dangote Sugar Refinery still reporting losses, the overall outlook for the FMCG sector remains positive. Analysts anticipate that continued stability in the foreign exchange market will further bolster the financial recovery of these firms in 2025. With reduced pressure from currency volatility and enhanced financial planning, FMCG companies are expected to maintain their upward trajectory, though challenges remain for certain firms. The sector’s strong Q1 performance signals the potential for sustained growth and profitability if current economic trends continue.
Source: Guardian