Nestlé Nigeria Posts Strong Q1 2026 Earnings Growth as FX Gains Cushion Cost Pressures

Nestlé Nigeria Plc has reported a solid start to the 2026 financial year, posting a 29.2% year-on-year increase in earnings per share (EPS) to N49.20 in its unaudited results for the quarter ended 30 April 2026. The performance was supported by modest revenue expansion, improved foreign exchange gains, and a significant reduction in net finance costs, even as underlying operating pressures persisted.
According to the results released by Nestlé Nigeria Plc⁠�, revenue grew by 10.6% year-on-year, a sharp slowdown compared to the 144.0% surge recorded in the same period last year. Growth was largely driven by the Beverages segment, which expanded by 18.4% and increased its share of total revenue to 38.4%, up from 35.9% in Q1 2025. The Food segment, which remains the company’s largest revenue contributor, grew at a slower pace of 6.5%, reflecting softer demand conditions across key product categories.
On a sequential basis, revenue rose marginally by 0.9%, underscoring a mixed demand environment. Beverages posted a 6.5% quarter-on-quarter increase, while the Food segment declined by 2.3%, signalling uneven consumption patterns across product lines.
Rising input costs weigh on margins
Despite topline growth, profitability at the gross level came under mild pressure. Gross margin declined slightly by 11 basis points to 40.5%, as cost of sales increased by 10.8% year-on-year, outpacing revenue growth. This was largely driven by a 19.0% surge in raw material costs, reflecting continued inflationary pressures in the operating environment.
However, there was some relief on a quarter-on-quarter basis, as cost of sales declined by 9.4%, suggesting a partial easing in input cost pressures.
Operating expenses surge amid market defence strategy
Below the gross profit line, operating performance weakened further. EBIT margin fell by 201 basis points to 23.1%, while EBITDA margin declined by 187 basis points to 26.3%.
This contraction was driven by a 24.7% year-on-year rise in operating expenses, as the company ramped up marketing and distribution spending by 26.1%. The increased expenditure reflects a deliberate strategy to defend market share and strengthen product penetration amid subdued consumer demand and heightened competition.
FX gains drive sharp drop in finance costs
A key highlight of the quarter was the significant improvement in net finance costs, which fell sharply by 92.8% year-on-year. This was primarily driven by foreign exchange gains of N14.76 billion, compared to nil in the same period last year.
Finance income surged by over 3,000%, while finance costs declined by 27.9%, supported by lower interest expenses on financial liabilities. This helped offset weak operating leverage and provided a strong boost to overall profitability.
Profit rises despite higher tax burden
As a result, profit before tax rose by 44.2% year-on-year to N73.77 billion, compared to N51.15 billion in Q1 2025. However, a sharp 65.8% increase in tax expenses moderated bottom-line growth.
Profit after tax still increased by 29.2% year-on-year to N39.00 billion, compared to N30.18 billion in the corresponding period of 2025.
Outlook
While Nestlé Nigeria’s Q1 2026 performance reflects resilience supported by FX gains and steady beverage growth, underlying operational challenges remain evident. Rising input costs and higher operating expenses continue to pressure margins, even as revenue growth stabilises at a more moderate pace.
Going forward, the company’s performance is expected to hinge on its ability to sustain volume growth, particularly in a pricing-constrained environment, while managing costs effectively and defending market share across key product categories.
Analysts note that earnings momentum may remain sensitive to foreign exchange movements and cost inflation trends in the coming quarters.
Nestlé Nigeria reports a 29.2% rise in Q1 2026 earnings per share to N49.20, driven by FX gains and beverage growth, despite higher costs and margin pressure.