Q1 2025 may go down as a comeback quarter for Nigeria’s major consumer goods players.
After a stormy 2024 defined by volatile foreign exchange rates and surging interest expenses, five of the sector’s most-watched companies, BUA Foods, Nestlé, NASCON, Cadbury, and Dangote Sugar, returned in the first quarter with renewed financial energy.
The sharp reversal in fortunes was driven largely by macroeconomic improvements: a more stable naira and easing inflation. Collectively, the companies posted improved profitability and significantly reduced losses.
But while the general turnaround is clear, the bigger question for investors is this: which of these companies is offering the best value right now? Strong earnings are one thing, but value, growth potential, and shareholder returns are another.
All five companies, BUA Foods, NASCON, Nestlé, Cadbury, and Dangote Sugar, showed different shades of recovery, but the strength and sustainability of those rebounds vary.
BUA Foods
The company came into the year with a strong footing, posting a pre-tax profit of N136.38 billion in just three months and growing its earnings per share by over 100% to N6.96.
That kind of early performance might catch the eye of any investor. But what’s behind the numbers is just as important.
BUA managed to cut its interest expenses by a huge 75% compared to last year, showing it pays less to service its debts. The company also trimmed its total borrowings slightly, which means it’s becoming less reliant on loans. It now covers its interest payments 37 times over from its operating profit, a healthy sign that it is not struggling with debt.
Its debt level makes up just about 31.5% of its total assets, giving it some breathing room compared to more heavily leveraged peers.
On the market side, BUA Foods is currently valued at N7.52 trillion, with its share price moving up slightly this year.
- It also offers a 3.11% dividend yield, which might appeal to income-focused investors, and trades at a price-to-earnings ratio of 22.42x, not cheap, but perhaps reasonable for a company showing this kind of earnings momentum.
Whether that makes it the most valuable pick among the five is up for debate, but the numbers suggest BUA has started the year in a strong position.
NASCON
NASCON also has an impressive start to 2025, especially when you compare it to its full-year 2024 performance.
In Q1 alone, the company made an operating profit of N10.42 billion, almost half of what it made in the whole of 2024. That’s a big leap in just three months.
Its earnings per share came in at N3.74, up by over 100%, meaning shareholders are seeing better value from each share.
One standout detail is how NASCON slashed its debt.
- Total borrowings dropped by a massive 60% to just N1.145 billion, which was among the lowest in this group. That low level of borrowing means the company has very little interest to pay, and it shows: interest expenses dropped by 41% compared to last year.
- It now covers its interest payments 49 times over from its profits, making it one of the most financially comfortable companies in terms of debt servicing.
Its debt now accounts for just about 1.26% of its total assets, a huge drop from before and easily the lowest among the companies under review.
On the market side, NASCON’s share price has jumped by over 72% this year, with the stock currently valued at N143.07 billion.
- It also offers a dividend yield of 3.70%, which is slightly higher than BUA’s.
- Its price-to-earnings ratio stands at 6.66x, much lower than the others, which could suggest that the stock is relatively cheap compared to how much it is earning.
So, while NASCON may not be the biggest name on the list, its strong start, low debt, and relatively affordable share price might be compelling to value-seeking investors.
Nestle Nigeria
Nestlé Nigeria staged one of the most dramatic turnarounds in Q1 2025. After recording a heavy loss in 2024, it swung back to profitability with a pre-tax profit of N51.6 billion in just three months compared to a loss of N96.4 billion in the entire 2024.
- This rebound was helped by a sharp drop in forex losses and reduced finance costs.
- Its Q1 earnings per share were N38.07, a strong shift from the negative N181 posted in Q1 2024.
- Operating profit more than tripled to N74.15 billion.
- Interest coverage rose to 3.18x from 1.64x in 2024, showing it’s in a better position to meet its loan obligations.
- Total borrowings also declined by 7.6% to N604 billion.
Still, it’s important to note that Nestlé remains highly leveraged, with a debt-to-assets ratio of 67%.
Its share price has risen 38% year-to-date, and with a P/E ratio of 116x, the stock is clearly priced for high expectations.
- That premium may reflect investor confidence in the turnaround, but it also means it’s more expensive relative to earnings than its peers.
Cadbury Nigeria had a better Q1 2025, but it’s still in recovery mode.
- The company posted a pre-tax profit of N8.57 billion in Q1, bouncing back from a full-year loss of N10.9 billion in 2024.
- Operating profit surged by 251% year-on-year to N9.69 billion, showing core operations are improving.
- However, earnings per share stood at N2.62, still reflecting past losses.
Borrowings rose slightly to N34.9 billion, and interest expenses dropped. Cadbury’s interest coverage improved to 8.64x, suggesting that its operating profit can reasonably cover its interest expenses.
The stock has rallied 86% year-to-date, but its negative P/E ratio suggests that the market is still pricing in its trailing losses.
Dangote Sugar is showing signs of recovery, but the road is still long.
- In Q1 2025, the company reduced its pre-tax loss to N22 billion, a notable improvement from the N120 billion loss in Q1 2024 and the staggering N271 billion full-year loss in 2024.
- This indicates that while the company remains in the red, it’s pulling back from the financial cliff it teetered on last year.
However, the rest of the numbers still paint a picture of a business under pressure.
- Operating profit fell by 48% year-on-year, suggesting that core operations are yet to regain momentum.
- The company reported a loss per share of N1.95, further underlining the drag on shareholder value.
Borrowings remain high at N727 billion, and interest expenses rose by 52%, putting additional strain on the bottom line.
The interest coverage ratio of just 0.09x means the company earns barely enough to cover even a fraction of its interest obligations, well below the threshold that signals financial health.
Despite all of this, the stock has climbed 18.77% year-to-date. This may reflect investor optimism that the worst is behind it or confidence in a broader macroeconomic recovery. But optimism alone can’t fix fundamentals.
Overall, NASCON appears to be the best positioned in terms of value, financial health, and upside potential.
BUA Foods and Nestlé are fundamentally strong but already appear richly valued. Cadbury and Dangote Sugar remain recovery stories, but investors should tread cautiously.
