Consumer goods are beginning to heave a sigh of relief as inflationary pressures are cooling and the Nigerian naira bouncing back, maintaining firmness after shedding 41 per cent of its value last year.
This is good news for the Fast Moving Consumer Goods (FMCG) sector that has been saddled with a plethora of issues, including foreign exchange volatility, insecurity in food-producing states that pressured domestic input prices, and unfavourable government policies.
These issues culminated in significant margin erosion for FMCGs in the last two years, but the volatility in the FX market is subsiding, reducing the risk of FX losses and weaker equity for the sector while bolstering domestic consumption.
Data from the National Bureau of Statistics (NBS) show that Nigeria’s inflation tumbled, now reading at 23.18 per cent in February after an average of 32 per cent last year, leaving policymakers with no choice than to aggressively hike monetary policy rate which now stood at record high of 27.5 per cent.
This is as Nigeria’s naira climbed the most against the dollar in almost a month at ₦1,531.25 per dollar on Monday, according to CBN data, a 0.4 per cent or ₦5.57 gain from ₦1,536.82/$1 last Friday.
“We anticipate a sector-wide recovery in 2025,” analysts at CardinalStone research said. “This rebound will be supported by improving macroeconomic conditions, which should boost household consumption and ease input cost pressures.”
“Inflation is projected to trend downward in the medium term, driven by moderating PMS and AGO prices on the back of a decline in global crude oil prices and an improved supply of refined products domestically.”
The analysts said product innovation and expanded distribution networks by players in the sector are expected to boost sales growth and cascade to further bottom-line support.
Below is an analysis of leading consumer goods such as BUA Foods and Dangote Sugar by BusinessDay, to show the companies’ recovery via data from their books.
BUA Foods
BUA Foods delivered its highest ever annual revenue of ₦1.53 trillion since listing on the Nigerian Exchange in 2021 last year. This is more than double the ₦729.4 billion recorded in 2023, according to the company’s audited financial statements for the year ended December 31, 2024.
The historic numbers show the company is, at a very fast pace, recovering from the shocks of the government policies in 2023 that soared inflation and led to record exchange rate losses due to the devaluation of the naira.
The report shows that the growth was driven by an increased demand for the company’s core products such as sugar, flour, and pasta, as well as increased production capacity, strategic pricing, and deeper market penetration across Nigeria.
Despite recording a ₦178 billion exchange loss due to currency depreciation, the company’s pre-tax profit rose by 162.9 per cent to ₦284.3 billion from ₦108 billion, while after-tax profit grew by 137.3 perc ent to ₦265.99 billion from ₦112 billion, strengthening BUA Foods’ position as one of Nigeria’s most profitable consumer goods companies in 2024.
Earnings Per Share (EPS) also climbed 145.3 per cent to ₦15.27, underscoring the company’s ability to drive value creation for shareholders.
Ayodele Abioye, managing director of BUA Foods, said the results underscored the company’s ability to navigate challenges with agility and its resilience, expressing optimism on the back of stable macroeconomic conditions.
“Looking ahead with optimism, coupled with stability in the macro-economic environment, we would continue to focus our operations and strategic investment initiatives towards addressing food supply challenges,” he said.
Dangote Sugar
Dangote Sugar Refinery Plc saw its after-loss deepen further after higher production costs and FX losses in 2024 dealt a blow on the company’s financials.
The after-tax loss deepened to ₦192.6 billion in 2024 from ₦73.8 billion in 2023, highlighting the impact of the naira volatility.
“Dangote Sugar Refinery Plc reported a net loss of N192.62 billion in its FY’24 audited results, primarily due to rising production costs and significant foreign exchange losses,” analysts at Cardinalstone said in a note.
The firm’s production costs increased by 79 per cent to ₦634.6 billion driven by raw material expenses which stood at ₦546.1 billion, direct overheads stood at ₦52.02 billion, and freight expenses of ₦18.3 billion, direct labour cost of ₦9.13 billion and depreciation of ₦9.05 billion.
But analysts are betting on the now stable naira and slowing inflationary pressures for the biggest sugar refiner to turn the tide of losses for the past two years and return to profitability.
