Why Nigerian Breweries and Nestlé are recovering faster than expected

Nigerian Breweries Plc and Nestlé Nigeria Plc, two consumer goods giants listed on the Nigerian Stock Exchange (NGX), have released their 2025 audited results, showing impressive recoveries in 2025, with strong momentum carrying into Q1 2026.

After struggling through the Naira devaluation-induced crisis of 2023 and 2024, the companies have returned to profitability, and investors are taking notice.

But the big question is: Is this recovery sustainable, and is it still time to buy and/or hold these stocks?

First, let us look at the crisis years, recovery, and what led to them.

The crisis years

Both companies faced major headwinds in 2023 and 2024, primarily from foreign exchange volatility and rising borrowing costs.

Despite consistent consumer demand for their products, both companies struggled to turn revenue growth into profits due to:

• FX losses: Nigerian Breweries suffered N153.3 billion in FX losses in 2023, while Nestlé saw an increase in FX-related losses, peaking at N290.7 billion in 2024.
• Rising finance costs: Both companies saw a massive surge in finance costs. For Nigerian Breweries, finance costs jumped from N8 billion in 2022 to N257.1 billion in 2024, and for Nestlé, they spiked from N233.5 billion in 2023 to N392.8 billion in 2024.

These financial pressures wiped out profits and led to heavy accumulated losses, forcing both companies to suspend dividends after their 2022 financial year.

The recovery – Nigerian Breweries 

In 2025, Nigerian Breweries posted a profit after tax of N99 billion, a stark turnaround from the N145 billion loss recorded in 2024.

The company not only recovered from its deep losses but continued its upward momentum, achieving N55.9 billion profit in Q1 2026, a 26% increase compared to Q1 2025. This represents more than half of its total 2025 profit in just one quarter.

A key factor in the recovery was the significant reduction in FX losses.

• Nigerian Breweries recorded zero foreign exchange losses in 2025 and Q1 2026, compared to the N153.3 billion FX loss in 2023 and N257.1 billion FX loss in 2024.
• This recovery has also been sustained in 2026, with zero foreign exchange (FX) losses recorded in Q1 2026, allowing its operating profit of N87.4 billion to flow into a profit before tax of N80.4 billion.

Deleveraging: The company aggressively reduced its debt, cutting total borrowings from N341.6 billion in 2023 to N59.7 billion in 2025, and by Q1 2026, its debt stood at N56.1 billion.

• This shift into a net cash position allowed finance costs to collapse from N257.1 billion in 2024 to N45.9 billion in 2025 and N8 billion in Q1 2026.

Although top-line performance was never a challenge during the crisis years, notwithstanding revenue growth is still a contributing factor.

• Revenue grew from N550.6 billion in 2022 to N1.47 trillion in 2025, driven by price adjustments and strong consumer demand for its products, including beer and soft drinks.

Nestlé Nigeria: 

Nestlé Nigeria mirrored Nigerian Breweries’ recovery, posting a profit after tax of N104.97 billion in 2025, compared to a loss of N164.6 billion in 2024.

• Nestlé’s recovery was equally impressive, with a N38.99 billion profit in Q1 2026, 29% higher than the N30.18 billion profit in Q1 2025, already accounting for 37% of 2025’s total profit.

Just like Nigerian Breweries, Nestlé’s recovery was driven by zero foreign exchange losses.

• In 2025, the company recorded zero FX-related translation losses after recording N290.7 billion FX losses in 2024.  Also, in Q1 2026, it recorded zero FX-related losses, enabling the company to convert N75.4 billion operating profit into a N73.8 billion profit before tax.

Another factor was the deleveraging of the balance sheet, which contributed to the decline in finance costs.

• In 2025, total borrowings reduced to N476 billion from N653.7 billion in 2024. By Q1 2026, its debt had further dropped by about 7% to N447 billion.
• Consequently, finance costs decreased from N392.8 billion in 2024 to N101 billion in 2025, allowing more of the company’s operating profit to flow into the bottom line.
• As a result, Nestlé converted N225.4 billion operating profit, into N166.8 billion profit before tax in 2025, compared to N221.6 billion pre-tax loss in 2024.

Investor sentiment and valuation 

Both companies have seen their stock prices recover significantly:

• Nigerian Breweries gained 135% in 2025 and 13.55% year-to-date in 2026.
• Nestlé Nigeria gained 129% YTD in 2025 and has added 59% in 2026.

At current share prices and 12-month trailing earnings per share:

• Nigerian Breweries trades around 24x earnings.
• Nestlé Nigeria trades at 22x earnings.

These multiples reflect the market’s optimism and the companies’ return to profitability.

This suggests that investors are no longer pricing them as distressed companies but are starting to value them based on their growth potential and recovery.

But are the stocks oversold or overbought? 

Despite the strong price gains, neither stock is in oversold or overbought territory:

• Nigerian Breweries’ RSI of 62.75 suggests it’s in a strong uptrend, with room to grow before hitting overbought conditions.
• Nestlé Nigeria’s RSI of 41.64 indicates it’s still in neutral territory, leaving more room for upside without the immediate risk of a pullback.

The outlook: Is it still time to Buy? 

Given the strong recovery, the high expectation, and the positive momentum, both companies appear to have further room to grow in the short-to-medium term. The risk of immediate correction is low, as indicated by their RSI readings.

Investors looking for growth in the consumer goods sector, particularly in companies with resilient brands and recovering balance sheets, may find Nigerian Breweries and Nestlé Nigeria still attractive investments in 2026.