August 10, 2026/InvestmentOne Report
Nestle Nigeria delivered a solid top-line performance during H1:2026, with revenue increasing to NGN650.76bn, representing an 11.98% year-on-year growth over NGN581.12bn recorded in H1:2025. The growth reflects recovery in consumer demand, and sustained strength across the Company’s core food and beverage portfolio despite the challenging macroeconomic environment.
Cost of sales rose by 10.13% YoY to NGN392.24bn, slightly below the pace of revenue growth. Consequently, gross profit expanded by 14.92% YoY to NGN258.52bn, while gross margin improved to 39.73% from 38.71% despite commodity prices and energy costs remaining significant challenges.
Operating Performance Moderates as Cost Pressures Persist: Results from operating activities increased to NGN141.36bn, representing an 8.37%YoY improvement over NGN130.44bn reported in H1:2025. While operating earnings continued to grow, the rate of expansion lagged revenue growth, indicating that operating cost pressures remained elevated throughout the period. Marketing and distribution expenses increased significantly by 26.96% to NGN93.55bn, reflecting higher transportation costs, expanded route-to-market activities, and continued investment in brand visibility. Administrative expenses also increased by 12.89% to NGN24.24bn, consistent with inflationary pressures affecting personnel and corporate overheads. As a result, operating margin declined modestly to 21.72%, compared with 22.45% in H1:2025.
Finance costs Deceleration: The decisive swing factor was net finance cost, which fell 65.29% yearon-year to NGN14.60bn. Finance income jumped to NGN33.26bn from NGN1.12bn, largely reflecting a NGN32.14bn unrealised foreign exchange gain on translation of foreign-currency balances as the naira’s relative stability through H1 2026 reversed prior-year losses. Finance costs still rose to NGN47.86bn from NGN43.17bn, reflecting higher gross interest expense on bank borrowings The combination of resilient operating performance and a significant improvement in net finance income resulted in profit before tax (PBT) increasing by 43.41% YoY to NGN126.77bn, compared with NGN88.40bn in H1:2025. Income tax expense increased sharply during the period, rising 63.89% YoY as the Company’s effective tax rate climbed to 48.90% from 42.79% in the corresponding period of 2025. Despite the significantly higher tax burden, profit after tax (PAT) increased by 28.09% to NGN64.78bn.
Balance Sheet: Total assets were roughly flat at NGN847.43bn (+0.15%), with shareholders’ equity rising to NGN77.56bn from NGN12.89bn at year-end 2025, as the accumulated deficit narrowed to NGN48.00bn from NGN112.78bn on the back of the period’s NGN64.78bn profit. This marks the continuation of a rebuild in equity that began after the company recorded a deeply negative equity position during the 2023–2024 currency crisis.
Interest-bearing loans and borrowings were reduced to NGN445.01bn from NGN476.04bn (-6.52%), helped by NGN33.98bn of bank loan repayments and a NGN17.69bn unrealised exchange gain on the loan book, partially offset by NGN28.95bn of new drawdowns under import trade finance facilities. Net cash from operating activities fell sharply to NGN58.04bn from NGN187.60bn a year earlier (-69.07%), largely a working-capital story: prepayments rose NGN46.09bn (chiefly import deposits) and trade payables fell NGN29.77bn, both cash-consuming, versus favourable workingcapital swings in the prior-year period.
OUTLOOK: We expect Nestle Nigeria’s earnings momentum to persist through H2:2026, underpinned by continued strength in the Beverages segment and a lighter finance cost burden should naira stability hold. A separate development is the mandate of Nestle s ongoing restructuring of its bottled water business into a standalone joint venture. We do not forecast a massive price movement for Nestle as the organization continues to struggle with debt. As such we place a NEUTRAL rating on the organization.
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