Nigeria’s fast-moving consumer goods companies are expected to extend their profitability streak in the third quarter of 2025 as easing inflation, a firmer naira, and improving consumer confidence lift volumes and margins, according to investment and research firm CardinalStone.
“We anticipate significant margin expansion across our FMCG coverage, supported by moderating input costs, stable foreign exchange conditions, and recovering household spending,” analysts at CardinalStone wrote in a note to clients. “Volume recovery remains the dominant theme across food and beverage players.”
A stronger naira and declining inflation are helping reduce raw material and packaging costs, leading to a moderation in the cost-to-sales ratio and improved profitability.
The naira has, for most of 2025, maintained rare stability, climbing to a nine-month high buoyed by portfolio inflows, stronger FX reserves, and coordinated policies that have seen the currency decouple from fluctuation in oil prices.
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The naira has for weeks traded below the “psychological” 1500/$ to close market on Thursday at 1471.03 per dollar as confidence continues to build in Africa’s most populous nation’s economy.
Inflation has equally been taking a back seat, slowing for the sixth straight month to 18.02 percent in September 2025, the lowest it’s been in three years. The stronger macroeconomic conditions are expected to boost the earnings of consumer goods firms.
Nestle Nigeria Plc is expected to post stronger sales in Q3 2025 as higher volumes across key product categories offset earlier cost pressures.
In the first six months of 2025, the consumer goods giant extended its rebound which started at the last quarter of last year, posting a net profit of N50.6 billion, a sharp reversal from a N176.6 billion loss a year earlier, as the Swiss-headquarted firm capitalised on rising sales and a more stable macroeconomic backdrop.
“The fact that Nestle still retains a net short dollar position amidst an appreciating domestic currency further supports our optimism,” the note said. “Revenue growth is likely to be driven primarily by volume expansion as consumer purchasing power gradually improves.”
Among brewers, Nigerian Breweries Plc is projected to deliver solid year-on-year growth but weaker quarter-on-quarter performance, reflecting typical seasonality and foreign exchange translation effects.
“Q3 is usually the weakest quarter for brewers given limited festivities,” the analysts said, noting that the company’s lowest sales have historically occurred in the third quarter. Although Nigerian Breweries’ net long dollar position may lead to marginal FX losses, lower input and packaging costs should keep margins “robust.”
Guinness Nigeria Plc is also expected to report strong year-on-year growth but modest quarter-on-quarter weakness, consistent with the industry’s seasonality. Still, Guinness’ diverse product mix provides resilience. “Its portfolio skew toward non-premium everyday brands tends to cushion volume declines during off-peak periods,” the note said.
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Unilever Nigeria Plc is projected to record stronger revenue both quarterly and annually, aided by increased volumes and easing inflation. The company’s “strategic decision to frontload raw material purchases” and a deleveraged balance sheet are expected to support margins, while a cash-rich position could boost finance income despite mild FX losses from the naira’s appreciation.
UAC of Nigeria Plc is seen extending strong performance as packaged foods sustain revenue growth. CardinalStone highlighted the firm’s cost optimisation measures, including the adoption of biomass for energy efficiency and a streamlined distribution model. “Our principal concern remains finance cost pressures,” the analysts said, though cheaper refinancing options may offer relief.
Dangote Sugar Refinery Plc is expected to benefit from seasonal strength and lower global sugar prices, down 8.7 percent quarter-on-quarter, alongside a 3.65 percent naira appreciation. “These dynamics should support margin recovery,” the report said, while warning that high borrowing costs remain a key downside risk.
BUA Foods Plc, Nigeria’s most valuable company, is projected to record strong revenue growth, led by the bakery flour segment. “Reduced focus on the sugar line has allowed management to ramp up capacity in more profitable segments,” CardinalStone said. Lower inflation and a stable FX environment are expected to bolster margins, even as the firm’s net long foreign-currency position may reduce FX gains.
Overall, CardinalStone expects the sector’s third-quarter earnings to reflect “a clear inflection point” in consumer recovery, supported by a calmer macro backdrop. “While performance differentiation will depend on pricing strategy, cost efficiency, and balance sheet structure, the easing inflationary trend provides a strong base for sustained margin expansion,” the analysts concluded.