July 30, 2025/CSL Research

Financial Highlights:

• Revenue: +42.8% y/y to ₦581.12Bn
• Cost of Sales: +27.4% y/y to ₦356.17Bn
• OPEX: +47.4% y/y to ₦95.12Bn
• EBITDA: +96.3% y/y to ₦148.60Bn
• Operating Profit: +106.8% y/y to ₦130.44Bn
• Profit After Tax: +128.6% y/y to ₦50.57Bn

Stock Rating: Under Review

In  its recently released H1 2025 results, Nestle Nigeria Plc. (Nestle) reported a 42.8% y/y Revenue growth to ₦581.12 billion from ₦406.97 billion in H1 2024. On a quarter-on-quarter (q/q) basis, Revenue for Nestle dipped by 2.9% q/q to ₦286.23 billion from ₦294.89 billion in Q1 2025. Across operating segments, Revenue from Nestle’s food segment—production and sale of maggi, cerelac, nan, lactogen, golden morn and energy snacks—advanced by 46.1% y/y to ₦380.79 billion from ₦260.65 billion in H1
2024.

This segment accounted for about 65.5% of total Revenue in H1 2025 compared to 64.1% in H1 2024. Revenue from the beverage segment rose by 36.9% y/y to ₦200.33 billion in H1 2025, up from ₦146.32 billion in H1 2024. The segment contributed 34.5% of total revenue, slightly lower than the 35.9% share recorded in the prior year. Geographically, domestic sales remained the primary growth driver, increasing by 42.9% y/y to ₦577.53 billion, compared to ₦404.12 billion in H1 2024.

Export sales also improved, rising by 25.8% y/y to ₦3.59 billion from ₦2.89 billion in H1 2024, supported by stronger demand across key West African markets. Nestlé’s Cost of Sales increased by 27.4% y/y to ₦356.17 billion in H1 2025, up from ₦279.67 billion in H1 2024. This increase was primarily driven by growth in raw
material costs (+17.3% y/y to ₦202.11 billion), direct overheads (+48.1% y/y to ₦82.91 billion), and direct labour costs (+42.5% y/y to ₦28.71 billion). These increases reflect the impact of persistent inflationary pressures, and a larger workforce compared to the previous year. Despite higher input costs, Nestlé’s cost-to-sales ratio improved significantly, declining to 61.3% in H1 2025 from 68.7% in H1 2024, indicating improved cost efficiency.

As a result, Gross Profit surged by 76.7% y/y to ₦224.95 billion in H1 2025, compared to ₦127.30 billion in the corresponding period last year.

On a quarterly basis, however, Q2 2025 Gross Profit declined by 12.1% to ₦105.23 billion, down from ₦119.72 billion in Q1 2025. Total Operating Expenses increased to ₦95.12bn in H1 2025 compared to ₦64.54bn in H1 2024, pressured by increases in shared service cost (+90.3% y/y to ₦10.80bn), freight cost (+45.2% y/y to ₦22.98bn), consumer promotional costs (+62.4% y/y to ₦18.89bn), and general license fee (+30.1% y/y to ₦21.03bn) across its Administrative, and Marketing and Distribution Expense lines. Overall, OPEX ratio for Nestle in H1 2025 settled at 16.4%, up from 15.9% in H1 2024.

Nestlé’s Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) came in at ₦148.60bn for H1 2025, up 96.3% year-on-year (y/y) from ₦75.72bn in H1 2024. The EBITDA margin increased by 7.0 percentage points to 25.6%, up from 18.6% in the previous year. Also, Operating Profit (EBIT) for the company rose by 106.8% y/y to ₦130.44bn in H1 2025, compared to ₦63.08bn in H1 2024 with the EBIT margin for H1 2025 scaling by 6.9 percentage points to 22.4%, compared to 15.5% in H1 2024.

Net Finance Cost for Nestle was down 86.7% y/y to ₦42.05bn in H1 2025 from ₦315.60bn in H1 2024. This was largely supported by the 86.4% y/y plunge in Finance Cost to ₦43.17bn in H1 2025, down from ₦318.11bn in H1 2024, as: 

1) Nestle reported a gain of ₦3.14bn in the period compared to a net exchange loss of ₦263.71bn on the translation of foreign currency denominated balances in H1 2024

2) The company also reported a 14.9% y/y drop in interest expense on financial liabilities to ₦46.31bn in H1 2025 from ₦54.40bn in H1 2024, due in part to zero additions of intercompany loans in the period, the realignment of short-term finance obligations into long-term debt in the prior year and continued repayment of existing intercompany loans, including the settlement of US$20 million in foreign currency (FX) loans during Q2 2025. Nestle recorded unrealized exchange gains of ₦2.30bn in H1 2025 from an unrealized exchange loss position of ₦233.10bn in FY 2024.

Nestlé Nigeria reported a strong recovery in profitability in H1 2025, posting a Profit Before Tax (PBT) of ₦88.40 billion, compared to a Loss Before Tax (LBT) of ₦252.53 billion in H1 2024. After accounting for an income tax expense of ₦37.83 billion, the company recorded a Profit After Tax (PAT) of ₦50.57 billion, a significant turnaround from a loss of ₦176.91 billion in the prior-year period. However, on a q/q basis, weaker revenue in Q2 2025 affected profitability. Q2 2025 PBT declined by 27.2% q/q to ₦37.24 billion (Q1 2025: ₦51.16 billion) while PAT fell by 32.4% q/q to ₦20.39 billion (Q1 2025: ₦30.18 billion).

Our recommendation and price target are currently under review, with a prior target price of ₦1,746.68/s and a BUY recommendation. Current Price: ₦1,890.00/share.

To read full report, click on the link below​​

​​​​​NESTLE H1 2025 Quick Take.pdf​​​​​​​​​​​​​​​​​​​​​

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