Onome Amuge
Nestlé Nigeria’s latest results offer an unusually clear window into how multinational consumer companies are adjusting to Nigeria’s volatile macroeconomic landscape, revealing a recovery driven less by headline profit and more by a decisive turnaround in cash generation.
After a bruising 2024 marked by currency losses and collapsing margins, the Nigerian arm of the Swiss food group has emerged with its strongest operating cash flow in at least five years. Net cash generated from operations rose to N248.4 billion in the nine months to 2025, a reversal from just N5.3 billion in the same period a year earlier. The appreciation reflects a combination of tighter working capital discipline, more assertive pricing and a stabilisation in foreign exchange conditions that has eased the pressure on imported input costs.
The cash rebound coincided with a return to profitability. Nestlé Nigeria reported profit of N72.5 billion for the period, compared with a loss of N184.3 billion a year earlier, as higher revenues and improved operating leverage offset lingering cost pressures. Revenue climbed 33 per cent to N884.5 billion, while operating profit rose nearly two-thirds to N181.3 billion.
For investors and analysts, the more telling figure is operating cash flow rather than net income. In an economy where sharp currency swings can distort earnings through non-cash revaluation charges, cash generation offers a cleaner measure of corporate health. Nestlé’s performance suggests that, beyond accounting effects, the company has regained control of its operating cycle, converting sales into cash more efficiently and reducing its reliance on external funding.
Much of that improvement came from the mechanics of day-to-day operations. Stronger collections from distributors, tighter inventory management and repeated price adjustments across key product lines helped lift naira revenues and free up cash tied down in working capital. Like other consumer goods companies, Nestlé has pushed through significant price increases over the past two years to keep pace with inflation and currency depreciation. The latest numbers indicate that demand, while strained, has held up sufficiently to support volumes and cash flow.
Foreign exchange dynamics also played a pivotal role. The company booked an FX gain of N34.8 billion, up from N3.8 billion in the same period last year, as the naira’s appreciation during the reporting window eased translation pressures. That marked a reversal from 2024, when a devaluation of the currency drove up costs for imported raw materials and saddled the company with heavy FX losses.
The improvement in cash flow has allowed Nestlé to take concrete steps to repair its balance sheet. During the third quarter, it repaid an additional $20 million of its intercompany foreign-currency loan, bringing total repayments to $40m year to date. Reducing its foreign currency exposure not only lowered interest and repayment risk but also amplified the benefit of a firmer naira, contributing to an FX gain of N20.8 billion during the quarter.
For a sector still facing imported inflation and currency volatility, that deleveraging is significant. Analysts say it enhances Nestlé’s financial flexibility, strengthening its capacity to fund capital expenditure internally, reduce debt further and withstand renewed macroeconomic shocks.
Yet the recovery remains incomplete. Despite returning to profitability, analysts noted that Nestlé Nigeria is unlikely to resume dividend payments in the near term. The company reported a negative shareholders’ equity position of N19.7 billion, largely the legacy of accumulated FX losses from previous periods. While analysts at CardinalStone expect equity to turn positive by the end of the financial year, they caution that retained earnings are likely to remain negative, limiting the scope for distributions in 2026.
